Food prices drop, so does inflation

There was not much change in rice prices in November, while vegetables saw a drop in prices because of a rise in supply. The prices of fish are also declining.

Food inflation fell by 1.61 percentage points last month on the back of stable food prices, resulting in a significant decline in general inflation, said the Bangladesh Bureau of Statistics' (BBS) monthly report released on Thursday.

The report titled "Consumer Price Index, Inflation Rate and Wage Rate Index in Bangladesh" revealed that general inflation at the national level stood at 5.52% in November, which was 6.44% in October.

The rate of general inflation dropped by 0.92 percentage points at the national level.

A significant drop in food inflation played a substantial role in reducing the general inflation rate, read the report.

It revealed that food inflation at the national level dropped to 5.73%, which was 1.61 percentage points lower than those in October.

Non-food inflation increased slightly in November and stood at 5.19%, which was 5% in October.

Food inflation dropped the highest 1.72 percentage points in rural areas and stood at 6.01% in November, which was 7.73% in October.

Rural general inflation dropped to 5.55% in November from 6.67% in October after a reduction of 1.12 percentage points.

Non-food inflation in urban areas increased by 0.03 percentage points and stood at 4.65%, according to the report.

Urban areas observed 5.47% in general inflation in November, which was 0.56 percentage points lower than October's 6.03%.

Urban food inflation dropped 1.37 percentage points in November, and the rate of reduction in food inflation is lower than in rural areas.

Urban food inflation stood at 5.11% last month, which was 6.48% in October.

The report also revealed that the moving average of inflation in the last 12 months stood at 5.73%. The average inflation in the preceding year was 5.56%. The rate of inflation is higher than the budgetary target of 5.5%.

The November inflation rate of 5.52% indicates that a commodity, which was Tk100 last year, will now cost Tk105.52. A person will have to buy a lower volume of commodities if his income remains static. The BBS also found a 6.10% growth in wages last month.

Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told The Business Standard that a drop in rice prices is reasonable during this ongoing Aman paddy harvesting season. In rural areas, the prices also decreased a bit. However, there is no sign of a reduction in rice prices in urban areas.

She also said rice, vegetables and other food items are being sold at higher prices than in pre-pandemic times. So, the BBS data regarding inflation does not reflect the exact market situation.

The BBS compiles the inflation with a smaller commodity basket and it should be widened with more commodities to identify the exact situation of commodity prices, Dr Fahmida added.