Nov inflation hits highest in 17 years

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The inflation rate on a point-to-point basis reached 11.21 percent in November last year, the highest in 17 years, while inflation in food items was 13.80 percent, mainly affecting people in low-income groups.

The surge in prices came during a period when income growth was very low, exacerbating the plight of consumers.

According to Bangladesh Bureau of Statistics (BBS), the inflation on average has seen a steady rise over the last few years and it reached the two-digit figure in July last year.

In October 2007, the inflation rate was 10.06 percent and it reached 11.21 in November with an increase of 1.15 percentage points.

The inflation on food items also increased in that month by 2.07 percentage points from October’s 11.73 percent, according to the BBS data.

The inflation rate on food items crossed the 11 percent mark in July last year and showed a steady rise until October. Then it had a big increase in November.

However, the inflation rate on non-food items decreased by 0.17 percentage points. It was 7.25 percent in November last year and 7.42 in October.

The rate of price increase of non-food items ranged between 4 and 6 percent before last April when it crossed the 7 percent mark.

Production losses due to natural calamities have added to the inflationary pressure and the average inflation rate may be in the range of 8.1 and 8.5 percent in FY08, the report says.

The average inflation rate in the last fiscal year was 7.2 percent. Until November, it was 8.61 percent on an average.

Sources said the average inflation rate of the current fiscal year may exceed the predicted figure of Bangladesh Bank.

The annual report of the central bank released last month observed that at present Bangladesh and other South Asian countries have been experiencing inflationary pressures mainly because of rising prices of commodities, including food and fuel, on the international market and increasing demand from growing income.

The soaring prices of essentials, especially food, acutely hurt the poor and worsened equity. On an average, the share of food items in the consumption basket is about 63 percent in rural area and 49 percent in urban area.

The BBS calculated the inflation rate with data as of November last year, but the present inflation rate appears to be higher as prices of both food and non-food items have increased in December and January.

According to the data of Trading Corporation of Bangladesh, prices of different types of rice have risen by 62-72 percent in last one year.

Consumers’ Association of Bangladesh (CAB), a non-government organisation working on consumers’ rights, in its December 31 report said the increase of living cost was the highest (16.78 percent) in 2007 compared to those since 1991.

The increase in prices of essentials was record high 18.92 percent in the last 17 years and the CAB report said besides increase in prices of food items, there was steady rise in the prices of non-food items like house rent, medical and transport costs etc.

LITTLE RISE IN INCOME
The BBS data shows that the income level of the population living below poverty line has increased at a lower rate in the last fiscal year.

The general wage rate has increased by only 4.5 percent in FY07 compared to 9.8 percent of FY06.

Referring to the BBS data, the central bank report said wages in the manufacturing sector has increased at a rate of 4.3 percent in FY07, which was 10.7 percent in FY06.

“Increases of wage rates in the manufacturing, agriculture, fisheries and construction sectors stayed below the rates of consumer price inflation of 7.2 percent in FY07,” the latest Bangladesh Bank annual report observed.

As per official data of 2005, nearly 40 percent of the country’s 140 million people live below the poverty line.

The picture was similar in the agriculture sector, which employs most of the country’s workforce, with an increase of 4.44 percent in wage rates in FY07 against the increase of 11.12 percent in FY06.

Speaking to The Daily Star, a housewife at the Mohammadpur kitchen market said it has become very difficult to prepare the budget of family expenditures. “Prices of essentials, mainly food items, have been increasing almost every couple of days and I face deficit in the middle of the month,” said Mili Mahmud.

Abdul Hye, a government official, said, “My wife usually maintains the family expenditures, but now she is asking me to take the responsibility saying it is impossible for her to maintain the family with such a low budget.”

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