Food prices shot up by 13.8% in Nov, pushing up general inflation

Maintaining a rising trend, food inflation in Bangladesh surged to 13.8% in November, increasing from 12.66% in October, according to the latest data from the Bangladesh Bureau of Statistics (BBS).

The rise in food prices has also contributed to an uptick in the country's general inflation, which reached 11.38% in November, up from 10.87% in October.

Last month's food inflation was the highest since July when it peaked at 14.10% due to disruptions in supply chains caused by anti-discrimination protests.

BBS data analysis shows that excluding the exceptional situation in July, food inflation has not exceeded 13% in the past 12 years. Food inflation in November typically ranges from 5% to 8%, with the exception of 2023, which saw a rise to 10.76%.

Binayak Sen, director general of the Bangladesh Institute of Development Studies (BIDS), explained that food inflation tends to increase during September, October and November, as the Aman rice harvest does not come in until December or January.

"These months are traditionally considered 'lean months', a term referring to periods when food supply is limited," said the economist.

He noted that the impact of unexpected floods this year has further affected vegetable prices, particularly in regions like Cumilla, Sylhet, and Noakhali, where crops were damaged.

Binayak further said despite tariff cuts on essentials like edible oil and sugar, the supply chain hasn't improved.

"Lowering import duties could boost imports and reduce prices, but importers claim current rates prevent profitability, which needs further investigation," he added.

Infographics: TBS

Zahid Hussain, former lead economist at the World Bank's Dhaka office, pointed out that production shortfalls, worsened by inefficient market management, are also contributing factors to high inflation.

"We are not policing where policing is needed. It ought to be applied to deter extortion in supply chains. We are instead applying it against retailers. Not surprisingly it has yielded exactly the opposite result," he added.

BBS data shows food inflation's impact has also been felt across different regions, with rural areas experiencing a food inflation of 13.41% and urban areas 14.63% in November.

Besides, non-food inflation increased to 9.39% in November, up from 9.34% in the previous month. Non-food inflation in rural and urban areas last month was recorded at 9.72% and 9.31%, respectively.

The general inflation rate last month stood at 11.53% in rural areas and 11.37% in urban areas.

The wage growth rate for November was 8.10%, slightly up from 8.07% in October, continuing a trend of wage growth falling below food inflation for the past 31 months.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, said the government's current measures to control inflation are ineffective. To reduce inflation, market monitoring or policing alone will not suffice; improvements in the supply chain are essential.

"A comprehensive analysis of all stages, from production to consumption, is needed to identify and address issues in the market. The government has failed to identify the specific problems affecting certain products, leading to a lack of effective policy measures. As a result, market issues persist, contributing to rising inflation," he added.