Published in The Business Standard on 5 January 2021
Pandemic pushes inflation to 3-year high
The month of December saw a slight relief in the cost of living, but the whole year threw up a contrasting picture
The overall inflation fell to 5.29% in December compared to the same period a year earlier. The last month inflation is the lowest in the whole year of 2020.
The month of December saw a slight relief in the cost of living, but the whole year threw up a contrasting picture.
According to the Bangladesh Bureau of Statistics (BBS), the highest inflation was recorded in 2020 among three years despite the decline in income due to the coronavirus.
Inflation averaged 5.69% in the last 12 months, up from 5.59% in 2019, the government agency said in a report released on Tuesday. Earlier in 2018, the average inflation was 5.55%.
Economists and experts say many lost their jobs last year because of Corona. Due to the shutdown, the economic activities of informal sector were disrupted.
Low-income people have not been able to shop outside of their basic needs. In this situation, the rate of inflation is expected to come down, but increased instead due to the gaps in the production and supply system.
Asked about it, the former lead economist at Dhaka office of the World Bank, Zahid Hossain told The Business Standard that the agricultural production suffered due to cyclones and floods last year as well as corona.
Apart from that, the supply activities of the products have also been disrupted. The supply of several imported goods including oil, onion and sugar was not received on time.
He said the control over commodity prices during Corona could have made ordinary people a little more comfortable. However, there was an unrest over prices in the market due to lack of market watch and competitive environment and inability to control suppliers.
He said the only consolation in the Bureau of Statistics report was that the overall inflation eased in November and December as food prices did not rise earlier.
However, the future inflation rate will depend on the government policy on food imports, boro paddy harvest and supply of essential commodities.
If food prices do not rise further, overall inflation will remain within the government target of 5.50% by the end of the financial year, he said.
Asked about it, Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun said the general public had been uneasy about the commodity prices last year due to inefficiency in the supply system.
She said due to Corona, many have lost their jobs and income. At that time, if the price of the product was under control, people’s suffering could be reduced.
The economist further said with the decline in human income, the government needs to take steps to control the market as well as provide low-cost and, in some cases, free essential commodities to the poor in the open market.
She also felt that the initiatives taken by the government in this regard during the Corona crisis were not very effective.
According to the BBS, the overall inflation fell to 5.29% in December from 5.52% in November.
At the same time, food inflation has come down to 5.34% from 5.73% in the previous month. In addition, inflation in non-food items rose slightly to 5.21% from 5.19% in November.
During the period, inflation has come down in rural and urban areas as well.
Reduction in food inflation has had a positive effect on the overall inflation. However, in all cases, inflation in non-food items has increased slightly.
The report was presented by BBS at a meeting of the Executive Committee of the National Economic Council (Ecnec) on Tuesday.
After the meeting, Planning Minister MA Mannan presented the information of inflation at a press briefing held at the NEC conference room in the capital.
He said inflation eased somewhat in December due to lower commodity prices. Hopefully it will come down further in the coming months.
According to the BBS report, the overall inflation has also declined in the city. This rate stood at 5.31%, which was 5.47% in November. Food inflation eased to 4.77% from 5.11% in the previous month.
However, inflation in non-food items rose marginally to 5.93% from 5.90% in November.
Overall inflation has also declined in rural areas. In November, it was 5.55%, but in December, it decreased to 5.28%. B
Besides, food inflation stood at 5.60%, up from 6.01% in November. Inflation in non-food items rose slightly to 4.67% from 4.65% in November.
The BBS highlights inflation and workers’ wage in its monthly report titled “Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh”.
A 5.29% inflation in last December means that the price of a product that could be bought at Tk100 now costs Tk105.29.
If the income does not increase at the same rate, the consumers have to buy less products than before.
However, in the last one year, the labour income has increased by 6.15%, according to the BBS report.