Rising food inflation bites consumers
While the planning minister blames the ongoing flood in some districts, economists blame disruption of supply chains due to Covid-19
Rising food prices have become a concern for consumers who are already in strain due to Covid-19, which has affected everything from supply chains to production and distribution since April.
If the inflationary pressure continues, according to analysts, it will hamper smooth recovery of the economy from the fallouts of the novel coronavirus pandemic.
The latest government data that was released on Monday shows point-to-point inflation rate surged by 0.67 percentage points to 6.02 percent – the highest in seven months.
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The rise was attributed to a significant increase in food inflation, data shows. Amid the lockdown in May, the point-to-point inflation rate was recorded at 5.35 percent, down from 5.96 percent in the previous month.
Food inflation increased to 6.54 percent last month from 5.22 percent in May. However, non-food inflation dropped to 5.22 percent in June from 5.75 percent in May.
While briefing journalists virtually on Monday, Planning Minister MA Mannan blamed the ongoing flood in some districts for the rise in inflation
"Rain and flood resulted in loss of crops, especially vegetables," he said.
He added that once roads and the transport system returned to normal after the flood, supply chains would restore and decrease the inflation.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue, said Covid-19 has disrupted supply chains, which might have contributed to a price hike.
"Also, some business people may take the chance as consumers have no way of quitting food," said the economist.
She said non-food inflation has dropped as some services like public transport and markets are operating partially. House rent seems to have reduced as lots of people have left the cities.
In fact, world food prices rose in June to post their first increase of 2020.
The Food and Agriculture Organisation (FAO) food price index, which measures monthly changes for a basket of cereal, oilseed, dairy product, meat and sugar, averaged 93.2 points in June – up by 2.1 percentage points from May.
Average inflation rose to 5.65 percent in the just-concluded 2019-20 fiscal year, which is the highest in the last four fiscal years, Bangladesh Bureau of Statistics data shows. Inflation in the 2018-19 fiscal year was 5.43 percent.
The government had set a target to keep inflation within 5.5 percent in the last fiscal year.
