Sufferings on even though inflation drops

The Bangladesh Bureau of Statistics (BBS) Wednesday gave good news that inflation has eased to 5.86% in January, which is 19 basis points lower than that in December. 

But the figures do not explain the plights of low- and middle-income people due to rising prices of essential commodities and services.

Take for Dhaka's Kathalbagan workshop workers and day labourers who now have to buy a paratha at Tk10 that was at Tk5. 

"After buying one kilogram of flour at Tk50, I cannot make even ten parathas. If I sell each of those at Tk5, how would I do the business," fuming Shahidul Islam asked while arguing with a customer over double price of paratha at a Kathalbagan eatery.     

The customers said now they have to pay almost double for breakfast and lunch though their income did not increase. 

But the eatery manager Shahidul had his arguments ready to support the hikes too. "Flour is now above Tk50 per kg, which was at Tk35 a year ago. With a Tk50 hike, palm oil for frying parathas rose to Tk145 per litre. Besides, there are gas [liquefied petroleum gas] price hikes too," he gave an explanation as to why they are now selling parathas at Tk10 per piece. 

But the monthly data about consumer prices published by the BBS hardly reflects the unusual food price hikes as well as increasing living cost of the low and middle-income – causing economists to wonder about the missing pieces of the inflation puzzle.          

Dr Fahmida Khatun, executive director at the Centre for Policy Dialogue, told The Business Standard that it is very difficult to match the BBS inflation data with the reality. 

Reining in inflation has now become a global challenge owing to rising food prices alongside a hike in fuel prices. Besides, prices of various products and services have also picked up an uptrend in the country because of their import dependence. 

In this situation, it is unusual for inflation to come down in the country, she added.

The BBS inflation data does not reflect the real market situation as the Consumer Price Index was made on the two-decade-old base year, Fahmida pointed out.

She recommended taking immediate steps to update the base year.

The overall point-to-point, compared with the same period of the previous year, dropped on the back of a sharp decline in non-food sector inflation despite a little increase in food inflation, according to an analysis of the regular monthly disclosure of the BBS.

The BBS report titled "Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) of January" revealed that non-food inflation dropped to 6.26% in January, which was 7% in December last year. The non-food inflation reduced by 74 basis points in a single month.

Food inflation increased by 14 basis points in the same time and stood at 5.6%, which was 5.46% in December.

Moving average inflation for the last 12 months dropped to 5.62%, which was 5.64% in February 2019 to January 2020 period, said the report.

Rural areas faced a significantly higher rate of inflation than urban areas in January.

The inflation rate in rural areas stood at 6.07% in January, which was 6.27% in December. The urban inflation reduced by 20 basis points in a month.

Inflation in rural areas dropped by 19 basis points and stood at 5.47% in January from 5.66% in December.

Urban areas faced 4.85% of food inflation in January, which is significantly higher, than 5.94% in rural areas.

Non-food inflation in rural areas dropped to 6.32% in January from 6.94% in December, while such inflation in urban areas dropped to 6.17% in January from 7.07% in December.

Describing the 5.86% inflation data as "useless" amid the abnormal hike in commodity prices, Ghulam Rahman, chairman of the Consumers Association of Bangladesh (CAB), told TBS that inflation data does not reflect the real picture of what common people are grappling with.