THE average inflation in the outgoing financial year surpassing the average inflation in the past financial year, which was a decade-high, shows the inefficiency and inadequacy of measures taken by the government to contain inflation. The overall 12-month average inflation has been recorded by the Bangladesh Bureau of Statistics at 9.73 per cent between June 2023 and May 2024, while it was 9.02 per cent in the 2022鈥�23 financial year. The government projected to contain inflation at 6 per cent this financial year. What is also concerning is that inflation, especially food inflation, continues to show an upward trend. The national statistical office recorded food inflation at 10.76 per cent in May, the second consecutive month that food inflation prevailed over 10 per cent. Earlier, the food inflation rate had gone up to 12.56 per cent in October 2023 and 10.76 per cent in November 2023 before it slowed down below double digits. Independent studies, meanwhile, question the veracity of the government figures and show that the actual inflation is higher than the BBS figure. A Centre for Policy Dialogue report says that the Bangladesh Bureau of Statistics has grossly underestimated the actual inflation situation while the South Asian Network on Economic Modeling also questions the accuracy of the BBS figure and says that the actual inflation.聽
Amid such high food inflation, people in the country spend more on food than people in many rich countries. It has also put low- and fixed-income people in a tight spot, where they are forced to cut their food intake, while many 鈥� 71 per cent of households, according to a SANEM survey 鈥� have applied livelihood-based coping strategies such as borrowing money, selling productive assets, or going into debt to buy food. Economists say that market manipulation by businesses has largely pushed food inflation up, while the government, with its weak market management and poor policies, has failed to contain food inflation. The government has also continued to blame the volatility on the international market for the record food inflation, even though food prices, according to the FAO鈥檚 food price index, have fallen sharply. A recent Bangladesh Bank report also points to the widening gap between retail and wholesale prices of essential items and says that proper market intervention is needed to contain food inflation. Prices of many essentials, imported or locally produced, have remained higher on the local market than on the international market. The commerce ministry, on two occasions, put price caps on essential food items and declared that it would take action if the prices were not followed. But it could not make traders follow the prices.
When a policy shift appears to be a must for addressing overall inflation, the authorities appear to lack the dynamism needed to contain food inflation. The government must, therefore, assess its policies and measures more cautiously so as to effectively address inflation, especially food inflation. The government must also enhance its support programmes to give low-income people some relief from the inflationary pressure.
