Nearly 5 lakh Bangladeshis to become extremely poor for higher inflation: WB

Business Report :
Around 5 lakh people in Bangladesh likely fell into extreme poverty between the fiscal years 2022-23 and 2023-2024 due to the erosion of purchasing power, said the World Bank.

“Weak private consumption growth and high inflation have halted poverty reduction. Higher food prices particularly impacted poor households, which allocate over half of their budget towards food expenditures,” it said.

In addition, 8.4 lakh people are projected to join the ranks of the moderately poor, who earn $3.65 a day in purchasing power parity (PPP), said the bank in its Poverty Macro Update on Bangladesh.

PPP is a measure that compares the relative value of currencies by examining the prices of a fixed basket of goods and services in different countries.

The World Bank defines extreme poverty based on an international poverty income of $2.15 a day. According to the definition, Bangladesh’s extreme poverty rate is forecasted to rise to 5.1 percent in FY24 from 4.9 percent the previous year.

The rate of moderate poverty is expected to increase to 29.4 percent at the end of FY24, up from 29.3 percent a year ago. The report adds that the ratio of the poor population is expected to decline from the next fiscal year.

“Elevated inflation will put pressure on consumption, while forex rationing will constrain private investment,” the report states.

However, it also predicts that inequality will remain stagnant.

The WB’s estimate of extreme poverty closely aligns with the estimates of the Bangladesh Bureau of Statistics (BBS), which states that the ratio of the extremely poor is 5.6 percent.