Inflation In Dhaka City: Middle-income group most affected

The middle-income group has suffered the most throughout 2022 as the average annual inflation rate was 11.08 percent in Dhaka city that year, according to the Consumer Association of Bangladesh.

Although the lower-income households faced comparatively less pressure, they had to compromise on their diet and living standards due to the increase in the prices of essential commodities and services.

The CAB, in a report, said the hiked prices of around 17 food and non-food products have directly contributed to the surge in the inflation rate last year.

The report was presented at a virtual press briefing by Mahfuz Kabir, research director of the Bangladesh Institute of International and Strategic Studies, on behalf of the CAB.

It was prepared on the basis of monthly price data of 141 food items, 49 non-food products and 25 services, from 11 markets under Dhaka North and South City Corporations.

Of the items, those majorly included in the CAB price monitoring report were rice, flour, pulses, bakery products, sugar, fish, eggs, domestic poultry, edible oil, imported fruits, vegetables, spices, tea and coffee, local and imported milk, washing and personal hygiene items, and transport costs.

Speaking about the methodology, Kabir said they have used January 2022 as the base month to compare with the other months' inflation.

Bangladesh Bureau of Statistics (BBS) calculates the inflation on a point-to-point basis, under which the Consumer Price Index (CPI) is estimated based on price changes the same month a year ago.

He added that they have used the data of the CPI of the BBS to understand the inflationary pressure on ordinary consumers in urban areas of Bangladesh throughout 2022 compared to the first month of the year.

The general inflation rate started rising from February last year.

After a slight decrease in May, the rate began going up again in June and became much higher in August after the fresh hike in fuel prices. It continued increasing for two months before coming down slightly in December, the report said.

The food inflation rate in the capital for the low-income group was on a declining trend up to April last year, but both the food and non-food inflation rates started rising from May.

It stood at 10.32 percent in June. In July, it had slightly come down, just before hitting the year's highest of 15.31 percent in August.

After August, the rate continued to fall and it finally stood at 7.04 percent in December.

Meanwhile, the non-food inflation rate went all the way up to 18.86 percent in July last year.

Kabir assumed that due to the increase of house rent and prices of electricity and gas, the non-food inflation rate might go up further in 2023.

The CAB has proposed policy recommendations in its analysis of inflation trends.

The recommendations suggest the government increase subsidised food aid and social protection to reduce pressure on the people.

It also suggested the government extend social protection schemes in urban areas to protect low- and middle-income consumers from the rising inflationary pressures.

The government had significantly increased OMS activities during the pandemic, which was further extended in 2022 to protect the consumer groups from the economic slowdown and inflationary woes.

But there is an inadequacy of OMS food supply against extremely high demands, and a lack of proper monitoring to ensure equitable distribution of OMS food products among low-income people.

The CAB recommendation has also opposed the decision to increase gas and fuel oil prices at the retail level as the bulk price hike of those would further affect the lower-income people.

Speaking at the virtual press briefing, CAB Chairman Ghulam Rahman said there has been a lot of development in the country over the last decade and the per capita income of the people has also increased. However, the income of the upper class has been much higher than those of the lower- and middle-class people.

"The year 2022 was not a relief for the general people. The Russia-Ukraine War has also had an impact on Bangladesh. There is no way to deny that the incomes of many people had decreased during the coronavirus [pandemic] and its post period."

Rahman urged the government to take special measures to increase the income of the common people to reduce inequality.

He said that once the price of a product increases in the country, it cannot be expected to come down quickly.