The Bangladesh Bank in a report said that proper market intervention and implementation was needed to address the widening price gap between retail and wholesale prices of essential items that contributed to high food inflation in Bangladesh.
On Thursday, the central bank published its quarterly report, 鈥業nflation Dynamics in Bangladesh, January-March 2024,鈥� detailing the factors contributing to the country鈥檚 high inflation rates.
The report observed that retail and wholesale prices, along with the margins (the difference between retail and wholesale prices) for various essential items, increased during the reporting period.
The consumer price index, based on year-on-year headline inflation, remained elevated at around 10 per cent during January鈥揗arch 2024.
Over the past year, headline inflation fluctuated between 9 and 10 per cent, which is higher than the desired level, the report said.
During January-March 2024, the average headline inflation stood at 9.8 per cent year-on-year, where more than half of this growth came from core and energy CPIs, the remaining came from food items.
In the previous quarter (October-December 2023), the year-on-year headline inflation was at an average of 9.6 per cent, primarily driven by elevated food CPI, with the rest contributed by core and energy prices.
Core prices refers to the inflation measured without considering the volatile categories of food and energy prices, capturing the more stable and enduring components of inflation such as housing, healthcare, education, and other goods and services.
The report noted that when inflation was lower, around 6-7 per cent, food inflation was the primary contributor to headline inflation.
However, as inflation rose to around 10 per cent, energy and non-food inflation became the major driving forces.
In March 2024, food inflation also hovered at 10 per cent, with more than half of this inflation attributed to protein-based food prices.
The contribution of protein prices has been significant since early 2023, while spices and culinary essentials have prominently contributed since August 2023.
Non-food inflation was also elevated in the first quarter of 2024, reaching 9.3 per cent, largely due to increases in energy prices, restaurant prices, and other items such as tobacco, jewellery, travel accessories, and some service items.
The surge in electricity prices in March 2024 increased the energy contribution to inflation from 2.5 to 2.7 percentage points.
The contribution of import-concentrated items to inflation started to increase in August 2022, mainly due to a rise in international prices.
Since April 2022, inflation has remained on a higher trajectory compared to wage growth, resulting in lower purchasing power for consumers and a subsequent fall in real income.
This trend continued into negative territory at the end of March 2024, the report said.