Rural food inflation falls below urban rate for first time in 2 years

Infographic: TBS

A wholesaler at Atharabari market in Mymensignh's Ishwarganj upazila examines his latest haul of the newly arrived BR49 variety of paddy, which he bought for Tk1,100-1,150 per maund (40 kilograms).

Although the paddy harvested in the month of Boishakh is not readily available, it can still be bought at Tk1,460-1,470 per maund.

Before the start of the Aman paddy harvesting season, the prices of paddy in several districts, including Mymensingh, Kishoreganj and Netrakona, have decreased by about 23%.

The fall in the price of rice, along with the winter harvest of vegetables, has led to a decrease in rural food inflation, according to the Bangladesh Bureau of Statistics (BBS).

This is the first time in more than two years that the rural inflation rate has decreased below the urban rate, although increase in non-food inflation is still a cause for concern.

Due to a decrease in the price of paddy, the price of coarse and medium quality rice is also decreasing.

Nearly a quarter of the total expenditure of a rural household goes towards buying rice.

According to the latest report of the BBS, food inflation in rural areas fell to 8.38% in October, the lowest in the last six months. Rural food inflation in rural areas had risen sharply to 9.98% in August.

According to the data of the BSS, all kinds of food, including rice, rice, vegetables, fish and meat are produced in villages, which bear the brunt of the inflation, whereas cities see lower prices of food products.

From July 2020 to August this year, rural inflation exceeded urban rate by two percentage points in some months.

This time, according to the BSS report, food price inflation in urban areas was 8.75% against 8.38% in rural areas last month.

As such, food inflation in the city was 0.37 percentage points higher.

Economists believe that besides the new arrival of rice, the production of winter vegetables is contributing to reducing inflation in rural areas.

Apart from that, selling rice at the rate of Tk15 per kg for the poor and expanding the subsidised price programme of the Trading Corporation of Bangladesh (TCB) have also led to the fall in rural inflation.

Economists advised continuing providing food at subsidised prices until the cost dampens further in the future.

Dr Selim Raihan, a professor at Dhaka University, told The Business Standard that the price inflation of food products in villages has come down quite a bit in two months from around 10%, which is promising. But the problem is that non-food inflation in rural areas has risen to 9.98% at the same time.

Many people in rural areas may not have to go to the market to buy rice or vegetables because of the new crop.

Due to the decrease in demand, the price may have also decreased. In this situation, if the price of other products increases, people would not be comfortable, he added.

He also said although the rate has decreased slightly, an inflation rate of more than 8% means that consumers have to buy products at higher prices compared to the same period last year.

He also commented that if inflation does not reach 5%, there would be little relief for people.

Bangladesh Institute of Development Studies Research Director Dr Monzur Hossain told TBS that there are several reasons why the food inflation is high even though most produce comes from villages.

As all types of food are not produced in the same village, with some coming to the market from other areas, or rice coming from distant mills, prices may be higher.

The lack of good roads in rural areas also contributes to higher costs as transport charges are more.

In Nandigram upazila, which produces the most rice in Bogra, Barkat Hossain, a resident of Thalta Majhgram, said now Aman paddy is being sold at the price of Tk750-950.

At this time last year, the price of Aman paddy was Tk650- 750 per maund.

However, the price of new rice is much lower than that of Boro paddy.

Fazlu Mia, a retail trader of Bihar Bangram in the district, said eggplants are being sold at Tk50 per kg, cabbage at Tk60 and cucumber at Tk50.

However, the price of most vegetables in various markets, including Karwan Bazar in the capital, is kept close to Tk80 per kg.