Rural food inflation reached 15% in Oct-Dec 2023, BIDS finds

Highlights:

• Rising food prices push poorer rural households to reduce protein intake and rely more on rice
• Prices of eggs, sugar, milk, and vegetables surged, while rice prices rose slightly
• Wealthier households ate more meat and fish, while poorer ones chose cheaper alternatives
• Industrial workers hit hard with 12.38%-34.41% poverty rates, wages often inadequate for basic needs
• BIDS warned inflation would worsen living standards without systemic reforms
• BIDS urged stabilising food prices via better production, distribution, and regulation

Food inflation in Bangladesh's rural areas exceeded 15% during October-December 2023, according to a survey by the Bangladesh Institute of Development Studies (BIDS).

BIDS Director General Binayak Sen revealed that their survey, covering 3,887 rural households across all 64 districts, painted a significantly different picture of inflation's impact.

"Our survey found that rural food inflation was over 15% during this period. The hardest hit were the poor, who have significantly reduced their consumption of protein-rich foods like fish and meat," he said during the BIDS' Annual Development Conference in Dhaka today (8 December).

The BIDS report highlighted how rising food prices have forced low-income rural households to alter their diets.

Consumption of costly protein sources, including beef, mutton, and high-value fish like Ruhi, Katla, and White Carp, has declined sharply. Instead, these households have turned to more affordable starchy staples like rice.

BIDS Research Associate Rizwana Islam detailed these changes, saying, "The average per capita daily consumption of rice increased from 349 grams in 2022 to 394 grams in 2023, reflecting a shift towards cheaper calorie sources.

"Conversely, beef consumption dropped from 10 grams to 4 grams per person per day over the same period. Similarly, fruit intake plummeted from 91 grams to just 26 grams daily."

Rizwana added that while poorer households cut back on premium protein foods, they increased their intake of lower-cost options like Pangas and Tilapia fish.

For example, the poorest quintile consumed 14 grams of Pangas daily, compared to eight grams among the wealthiest households.

The report also examined protein consumption across wealth quintiles, revealing a widening disparity.

While the wealthiest rural households maintained higher intake levels of meat and fish, the poorest struggled to afford even basic protein sources.

For instance, daily beef consumption among the wealthiest quintile was 7.4 grams, compared to just one gram for the poorest.

In contrast, the poorest consumed more affordable options like chicken or duck (21 grams) and Pangas fish (14 grams), which were less common among wealthier households.

"Rising food prices have put immense pressure on rural communities, especially the poor. This has led to a decline in the consumption of protein-rich foods, negatively impacting their nutrition and overall health," Rizwana said.

Divergence from official data

According to BBS data, rural food inflation was 10.86% in November and 9.66% in December 2023.

However, the BIDS survey indicated a minimum inflation rate of 15% during the last quarter of the year, reaching as high as 19.94% for certain food items.

Comparing year-on-year price changes, the BIDS report found significant increases across key food categories.

The price of rice rose by 1-5%, beef by 6%, broiler chicken by 15%, and fish by 27%.

The cost of eggs surged by 24-27%, while sugar prices climbed by 35%, liquid milk by 25%, and vegetables by over 30%.

These findings suggest that rice, though essential, experienced the least price hike among staple items.

Binayak Sen argued that the effects of food inflation extend beyond dietary changes.

"High inflation disproportionately affects the poor, who often work harder to afford basic needs yet face declining nutritional quality. The government must focus on stabilising prices and improving the production and distribution of protein-rich foods," he said.

Challenges and future directions

The conference also included a session on labour conditions in Bangladesh's manufacturing sector, presented by BIDS Research Fellow Mohammad Harunur Rashid Bhuyan.

He noted that poverty rates among industrial workers were higher than national averages, ranging from 12.38% to 34.41%, depending on the sector.

Rashid highlighted that while the average monthly expenditure for a four-member worker household was Tk22,979, wages often fell short of this amount.

Approximately 20.53% of manufacturing workers earned less than their family's minimum expenses.

Workers not affiliated with trade unions faced even greater challenges, receiving lower wages and fewer benefits.

The findings underscore the need for targeted interventions to address inflation and its consequences.

Researcher Rizwana recommended strengthening the entire value chain for protein-rich foods to stabilise prices and ensure affordability.

Additionally, Nicholas Minot, a senior research fellow at the International Food Policy and Research Institute presented a report titled "Rice Market and Price Stabilisation in Bangladesh.

The presentation suggested that reducing government operations in food distribution had exacerbated price volatility, calling for more robust market interventions.  

The BIDS report concludes that while rural communities adapt to rising costs by altering consumption patterns, long-term solutions require systemic changes in food production, distribution, and market regulation.

Without such measures, inflation is likely to continue eroding the living standards of Bangladesh's most vulnerable populations.