A surge in prices of commodities became a major contributor to high inflation in July-September, according to a Bangladesh Bank report.
Moreover, high housing and health expenses emerged as the prominent drivers behind the escalating inflation in the period.
The report titled ‘Inflation dynamics in Bangladesh July–September 2024’ observed that over half of the inflation during this period stemmed from escalating food prices.
According to the report, since April 2022, real incomes have been steadily declining as inflation outpaced wage increases, eroding the purchasing power of most households.
Although there was a slight improvement in wage growth in September 2024, particularly in the Dhaka and Rangpur divisions, the increase was modest and insufficient to offset the broader inflationary pressures.
The BB report said that in July 2024, inflation surged to 11.7 per cent, the highest level in 12 years, and remained elevated at 9.9 per cent in September 2024.
This is a sharp increase compared with the 9.6 per cent recorded in the same month of the previous year.
Food inflation, in particular, hit 14.1 per cent in July — marking the highest rate in 13 years — before gradually easing to 11.4 per cent in August and 10.4 per cent in September.
However, despite the slight decrease, food inflation remained in double digit, underscoring the persistent cost-of-living crisis faced by households across the country.
The report said that rising prices of essential goods such as rice, wheat and vegetables kept food inflation high.
These price increases offset reductions in inflation for protein-based items like fish and meat, as well as essential cooking ingredients such as spices.
A heavy dependency on these staples for daily consumption placed an outsized burden on consumers, particularly those in lower-income brackets.
The contribution of perishable goods to headline inflation surged to 23 per cent in September from 18 per cent in June 2024, highlighting the volatility in prices of items such as vegetables and fruits.
On the other hand, the contribution of non-perishable goods, which typically include items with longer shelf lives like grains and cooking oil, declined to 52 per cent from 70 per cent over the same period, reflecting a changing landscape in consumer price pressures.
Beyond food, the report highlighted that rising housing costs emerged as a significant new contributor to inflation, particularly from August onwards.
By September 2024, housing rental costs accounted for 26 per cent of the inflationary pressures, signalling that the cost of living in urban areas is becoming increasingly unaffordable for many households.
Health and personal care costs also played a key role in driving non-food inflation, contributing approximately 17 per cent during the period.
The rising cost of medical services, coupled with higher prices for personal care products, exacerbated inflationary pressures, especially for lower-income families who spend a larger share of their income on essential goods and services.
However, the report noted a decline in the inflationary impact of energy prices, which had been a major factor since mid-2022.
This has provided some relief in non-food inflation, but the overall effect on consumers has been muted by rising costs in other essential categories.
A key finding in the report is the significant shift in inflation drivers from imported goods to domestically produced items.
In September 2024, the contribution of import-dependent goods to inflation fell to 26 per cent from 39 per cent in June, reflecting a possible easing of global supply chain pressures or currency stabilisation.
However, this was counterbalanced by the growing influence of domestic goods, which now accounted for 74 per cent of inflation, up from 61 per cent in June.
