Authorities must rein in food inflation to ease people’s sufferings

Food inflation in Bangladesh stayed above 12 per cent for the second consecutive month in September as prices showed no signs of cooling down, hitting the pockets of the consumers who spend most of their incomes to feed their families. Non-food inflation also fell, to 7.82 per cent, which was 7.95 per cent in August.

As a result, the Consumer Price Index (CPI), which measures the monthly change in prices paid by consumers, rose 9.63 per cent in September, down 29 basis points from more than a 12-year high recorded a month earlier.

A recent surge in inflation eroded consumer purchasing power, contributing to a slowing in estimated private consumption from 7.5 per cent to 3.5 per cent.

In the country, inflation has accelerated in the past one and a half years owing to a mixture of external and internal factors.

External factors include supply chain disruptions following Russia’s invasion of Ukraine and higher international commodity prices, while domestic factors include a 28 per cent depreciation of the taka against the US dollar since February last year, and persistent foreign currency shortages, driven by a 30 per cent drop in the reserve, leading to import restrictions.

The World Bank said a 179 per cent hike in the administered gas for the industrial sector, coupled with an increase in administered electricity prices led to higher prices for manufactured products.

The spike is almost double the official rate of food inflation.

People are under tremendous pressure to meet the food expenditures in both rural and urban areas.

Not only the poor but also the middle-income groups with fixed incomes are reeling under price pressure as they have to spend the lion’s share of their income to afford it.

It’s unprecedented that food inflation has stayed at an elevated level for a long time.

On September 14, the government fixed prices of three food items, namely eggs, onions, and potatoes.

It has capped the price of sugar and liquefied petroleum gas as well.

However, the price cap is not working. A chaotic situation exists in the market.

We urge the government to give priority to reining in inflation using institutions like the BB.