Food inflation hits rural areas harder

Food inflation jumped by 0.42 percentage points and stood at 6.50% in September; it was 6.08% in August.

The rising price of food pushed overall inflation in September to 5.97%, which was 0.29 percentage points higher than that in August.

Non-food inflation also increased slightly from 5.05% in August to 5.12% in September, revealed the Bangladesh Bureau of Statistics (BBS) in a report titled "Consumer Price Index (CPI), Inflation Rate and Wage Rate Index (WRI) in Bangladesh" yesterday.

There has been no significant difference in the rate of overall inflation in the rural and urban areas of the country, but food inflation rate jumped in rural areas by 0.52 percentage points in September and stood at 6.61%, reads the report.

It says the price of fine rice increased by 13% in September compared to the same time of the previous year. Price of medium quality and coarse rice also increased by 17.65% and 18.75% respectively at the same time.

Prices of vegetables, such as potatoes, eggplants, okra; spices, such as green chillies and onion; and other essential commodities, such as sugar and eggs, increased in September. This, in turn, caused food inflation to go up as well.

The BBS report revealed that the overall inflation in rural areas increased to 5.96% in September, compared to 5.60% in August. Besides, the overall inflation in urban areas increased slightly to 5.98% in September, which was 5.81% in August.

In rural areas, food inflation stood at 6.61% in September, which was 6.09% in August this year.

Urban areas also observed 6.26% food inflation in September, an increase of 0.20 percentage points from 6.06% in August.

Non-food inflation in rural areas increased by 0.01 percentage points and stood at 4.71% in September. Urban areas observed 5.65% non-food inflation in September, a slight increase from 5.51% in August.

The August inflation rate of 5.97% indicated that a commodity, which was Tk100 last year, will now cost Tk105.97. A person will have to buy a lower volume of the commodity if his/her income remains static.

However, the BBS report found 6.51% wage growth in September, compared to the same period in the previous year.

"Production of food was hampered due to Covid-19, Amphan, prolonged floods, and some other disasters, and that is why the price of food is rising," said Dr Sayema Haque Bidisha, professor of economics at the University of Dhaka.

She told The Business Standard Covid-19 had more effect on the income of the urban people which reduced their purchasing power. "But there have been no significant reasons for food prices to increase in rural areas more than in urban areas."

The professor said non-food inflation had been maintaining a trend for several months, which implied a significant irrelevance between inflation data and the reality.

The economist also said the overall inflation was not a concern for the people at the recovery stage of the economy, but the rising food prices remained a concern for the poor.

She said, "The government should widen its food rationing up to the rural areas, especially in areas damaged by floods, by ensuring proper targeting and eliminating leakages."

The food stock of the government now is very low, she said.

"The government should increase food stocks," she said, and recommended strengthening the market monitoring system.