Inflation calculation belies price hikes in Bangladesh

Moinul Haque | Updated at 01:27am on May 31, 2018

The official calculation of inflation remained close to the target set in the national budget for the outgoing financial year 2018 while consumers continued to feel the pinch of price hike of essentials.
Experts observed that the food inflation started to come down in recent time as the prices of rice decreased little bit because of bumper output of boro but the consumers passed their days with drastic up and down of commodity prices over the year.
‘It is very much interesting in Bangladesh that when food inflation goes up, non-food inflation goes down. Whereas, in other countries, when food inflation goes up, non-food inflation also go up,’ said Centre for Policy Dialogue research director Khondoker Golam Moazzem.
He said that increasing supply of products failed to impact on food inflation in FY18 that raised question if the commodity market was being manipulated by a few major companies.
Finance minister AMA Muhith had set a target of keeping the inflation at 5.5 per cent for FY18.
Bangladesh Bureau of Statistics data showed that the point-to-point inflation declined to 5.63 per cent in April from 5.68 per cent in March because of a drop in both food and non-food inflation in the month.
The point-to-point inflation, however, increased in April this year compared to that of April of the past year when the inflation rate was 5.47 per cent.
According to the data, food inflation dropped to 7.03 per cent in April from 7.09 per cent in March while non-food inflation decreased to 3.49 per cent from 3.52 per cent.
As per the official data, the inflation was a little bit higher than the target set in the budget while the prices of essentials, including rice, atta, onion and spices, remained at high in FY18.
People suffered a lot due to high prices of food items including rice, onion and vegetables over the year.
‘Average real monthly income of working people has been eroded due to inflation, although the nominal income has increased,’ Khondoker Golam Moazzem said.
As per the government data, the prices increased by 20 per cent for rice, 8.93 per cent for atta and 60 per cent for onion in this year.
According to the Trading Corporation of Bangladesh data, the prices of fine variety of rice increased by 16.98 per cent to Tk 58-66 a kilogram this year.
The prices of medium and coarse rice went down in recent time due to bumper output of aman and boro crops but the prices of the items shot up in the beginning of the financial year and remained at high up to January.
Although the government increased its stock of food through import, the initiative failed to intervene in market, experts said.
The TCB data also showed that the prices of atta increased by 8.93 per cent to Tk 26-35 a kg and refined atta increased by 9.76 per cent to Tk 44-46 a kg in the past one year.
It showed that the prices of local onion increased by 63.64 per cent to Tk 40-50 a kg, imported onion increased by 55.56 per cent to Tk 30-40 a kg, potato increased by 28.57 per cent to Tk 20-25 a kg, ginger increased by 22.22 per cent to Tk 90-130 a kg and soybean oil increased by 4.22 per cent to Tk 85-88 a litre in the past one year.
Policy Research Institute of Bangladesh executive director Ahsan H Mansur hoped that the inflation would remain close to the government set target in FY18 as the prices of rice began to decrease.
He, however, said that the exchange rate and bank interest rate might put a negative impact on commodity prices at the end of the year.