Determining price inflation

While people are reeling under the pressure of spiralling commodity prices, statements by three agencies of the government namely, the Ministry of Agriculture, the Trading Corporation of Bangladesh (TCB) and the Bangladesh Bureau of Statistics (BBS) give conflicting as well as confusing accounts. The BBS in its latest report indicated that the overall price situation has registered a downturn in the month of August 2015. It says, price rise in general was 19 per cent in August over the preceding month and prices fell by 0.1 per cent and 45 per cent in food items and non-food items respectively over July.
On point to point basis, the overall increase in price in August was 6.17 per cent compared to 6.36 per cent in July. Increase in food prices was 6.06 per cent in August compared to 6.07 per cent in July. In addition, prices of non-food items increased by 6.35 per cent in August compared to 6.80 per cent in July.
The same report also claimed that house rent and cost of furniture, household items, medical services, transportation and educational appliances have gone down in August.
On the other hand, figures disclosed by the Ministry of Agriculture and Trading Corporation of Bangladesh (TCB) on their web sites have shown increase in prices of most of the commodities in August. According to the web sites, in the space of only a month, price of palm oil increased by 16.39 per cent and that of soybean by 1.31 per cent in August. However, the price of rice was stated to be stable, reports of both organisations. It was also shown that prices of imported onions increased by 20 per cent and that of locally produced onions increased by 26.98 per cent over July. Similarly, price rose by 14.71 per cent and 15 per cent for imported and locally produced garlic respectively, that of sugar by 3.85 per cent and eggs per dozen by 10.45 per cent.    
According to reports of the above two government agencies, prices of vegetables showed an upward trend as green chilly was selling at Tk 200 per kg and potato at Tk 25 per kg in July and all kinds of vegetables are being sold at exorbitant prices. The BBS report also revealed that price inflation of food products in rural areas was 5.42 per cent in August compared to 5.43 per cent in July, while it was 7.56 per cent in August and 7.58 per cent in July in urban areas. Price inflation in food items went down by 1.0 per cent in rural areas and 2.0 per cent in urban areas in August. There has been an unusual price hike not only in the capital alone but also in other divisional towns. Prices of essentials went up exceptionally high due to shortfall and interruptions in supply. While the Ministry of Agriculture and the TCB have shown an upward trend in most commodity prices, the BBS released statistics that present a reverse picture.
These happen because the BBS calculates on the basis of average prices and therefore the actual market situation is not reflected. The contrasting figures presented by different government organisations on the rising trend of commodity prices occur due to varying standards of calculations. Generally, price of rice plays the dominant role in calculating price inflation and that is why the concerned ministry keeps the price of rice under control and prices of other commodities are overlooked. Since price of rice is under control, rise in prices of other commodities does not influence the calculations of price inflation. In order to bring rationality in the BBS statistics and present a realistic picture of commodity price inflation, the mode of calculation should be revised. Weight of rice in the basket of price inflation, which is abnormally high, should be brought down and those for other commodities should be upped realistically.
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