Food inflation falls, but reality bites 

The Bangladesh Bureau of Statistics (BBS) Tuesday came up with the "good news" that food inflation substantially dropped in July though the actual market picture and even commerce ministry data on food prices do not go with the BBS publication. 

Take for staple rice. Coarse rice was at Tk45-50 per kilogram on the last day of July in Dhaka. The rate was at Tk40-45 in the corresponding period last year, according to the Trading Corporation of Bangladesh (TCB) – a commerce ministry wing tasked with market monitoring.

TCB data suggest the price of coarse rice – often called the food staple of the lower income people – has spiked by more than 14% in one year. Meanwhile, the price of medium quality rice soared by 13% while premium rice edged up by 14.29%.    

However, coarse rice cannot be found below Tk50 per kg at local shops in Dhaka. Even the rate for the category in Dhaka's wholesale hub Karwanbazar is at Tk48 per kg.    

Karwanbazar Chatkhil Rice Agency owner Billal Hossain said that Swarna, a coarse rice variety, was at Tk40 even a year ago.  

According to Billal's count, the price of even the cheapest rice variety has surged by Tk8-10 per kg in one year – which is 20-25%.    

Soybean oil price has ticked up by more than 50% to Tk122 per litre from previous Tk80. With a whopping 62% rise, palm oil, which is often called the cheapest edible oil, soared to Tk105 per litre from Tk65 a year ago. Price of super palm olein increased by 58% during the period.   

Plus, people have been bearing the brunt of pandemic-led income crunch and job cut since last year.

However, the BBS report, published after the Executive Committee of the National Economic Council (Ecnec) meeting Tuesday, said food inflation in July dropped to 5.08% from 5.45% in June.  

The state-owned agency also claimed July food inflation is 45 basis points less than what it was in the corresponding period last year. 

As per the BBS report, the overall inflation rate in July was 5.36% -- 28 basis points less than June's 5.64% -- thanks to the drop in food prices. 

The overall inflation was 5.53% in July last year, that means the year-on-year overall inflation decreased by 17 basis points in July 2021.  

While briefing journalists on the report, Planning Minister MA Mannan said non-food inflation slightly rose in the first month of the current year. 

"The non-food inflation in July was 5.80%, which was 5.28% last year," said the minister, adding slightly cheaper food items helped the overall inflation cool off.    

The BBS report said prices of some vegetables such as bottle gourd, taro, and tomato edged down. But the report did not say anything about essentials such as rice, lentils and edible oil.        

'BBS report does not reflect on reality' 

Economists claim that the real situation in the market does not match with the inflation report published by the BBS. They say the price of many products has risen at an unusual rate as production and transportation have been disrupted due to the virus curbs. As employment is at risk, the people who have lost their means of income, are struggling to buy food at higher prices.

Dr Khandaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said people do not have income because of the pandemic. Many are running out of savings and loans. In this situation, the increase in the cost of living by more than 5% in one year is a big blow for the poor people.

Reviewing the trend of food and non-food inflation, he said, "When food sector inflation rises in our country, non-food inflation comes down strangely."

Bringing global examples, he said, in other countries, if food inflation rises, it increases in other sectors as well. He expressed skepticism, "There is a tendency in the country to show low and high inflation once in food and again in other sectors to keep the overall inflation at a certain level."

Professor Dr Sayema Haque Bidisha of economics at the Dhaka University said, due to some problems in data collection and processing, the market situation is not reflected in the inflation data of the bureau of statistics.

She said BBS calculates inflation through a handful of products. In order to give an idea about the market situation, it is necessary to reset the weight of each product as the amount of consumption by increasing the number of products at a reasonable rate in the information of inflation.

Professor Bidisha further said it is very important from which market the price of a product is being collected. As for example, she said, the price of vegetables sold in the Karwan Bazar market is much higher in other markets within a kilometer of the same price.

Advising to modernise the basis of inflation, she said, BBS is publishing the data of inflation on the basis of fiscal 2005-06. But the pattern of income and expenditure of people has changed a lot during this time. Many products have been added to the economy. People have reduced the use of many products. 

She also said if the bases and baskets are not updated, the real information of inflation in these sectors will not be available.