Inflation climbs higher, villagers bear brunt

Villagers get worst hit of price shocks as the overall high inflation in Bangladesh climbed higher and the rural rate hit a double-digit high in May, official data showed.
The inflation rate soared to 10 per cent in the rural Bangladesh in the past month -- significantly higher than the rate in the urban areas as well as in the national level, according to Bangladesh Bureau of Statistics (BBS) data, released Monday
Higher inflation on food account fuelled the point-to-point inflation in the national level by 0.15 percentage points to 9.89 per cent last month -- the highest in seven months.
In the previous month of April, the inflation was recorded at 9.74 per cent.
The inflation on a point-to-point basis in May last year (2023) was recorded 9.24 per cent.
Meanwhile, the food-inflation rate last May swelled by 0.54 percentage points to 10.76 per cent in the national level from 10.22 per cent in April.
On the other hand, the non-food inflation dropped by 0.15 percentage points to 9.19 per cent in May this year from 9.34 per cent in the previous month, April, BBS data showed.
Analysts say the higher inflationary pressure will not give a breath of respite in the near term in Bangladesh as the global rice prices are on the higher trajectory.
The higher food prices have already affected the Consumer Price Index, prepared by the BBS, they say.
Meanwhile, several government efforts have so far done little to curb the inflationary pressure on the consumers as that on the CPI has been maintaining a higher trend for more than a year.
Although a record-high inflation in the rural Bangladesh was recorded in October 2023 (9.99 per cent), over the last six months it was lesser than the rate.
However, after six months in last month of May, it again touched the figure at 9.99 per cent, the official data showed. In the previous month of April, the inflation rate in the rural area was recorded at 9.92 per cent.
Meanwhile, the food-inflation rate in villages was recorded at 10.73 per cent in May this year in a rise from 10.25 per cent in the previous month.
However, the non-food inflation in rural areas declined to 9.31 per cent in last month from that of 9.60 per cent in the previous month April.
In the urban areas, the rate of inflation last month was recorded at 9.72 per cent, 0.26 percentage points higher than the previous month, the BBS data showed.
In the urban areas, both the food inflation and non-food inflation rose higher.
The food inflation in the urban areas was recorded at 10.86 per cent in the past month from that of 10.19 per cent in April.
The non-food inflation fell by 0.02 percentage points to 9.03 per cent from 9.01 per cent in April in the towns.
"For straight 14 months, Bangladesh has failed to bring the inflation rate below 9.0 per cent as it is almost close to the double-digit club after fresh food-price spirals" over the last couple of months, analysts said.
The higher inflationary pressure already bite middle, lower-middle class and poor people as their expenditure for buying necessary items is eating the lion's share of their wags and monthly incomes, they said.
Economists say it is "hard to tame the inflation without stabilizing the exchange rate and a proper interest rate management".
Economist Dr Ahsan H Mansur says he was not observing any near-term recovery from the higher CPI trend as the global food prices, especially rice price, are high.
"If the monetary and fiscal policies are not managed properly, checking inflation will be a far cry," he told the FE.
The CPI is not coming down over the months as the prices of essential communities, including rice, meat, fish, vegetables and cooking oils are still high in the kitchen markets.
Meanwhile, the 12-month average inflation rate between June 2023 and May 2024 was recorded at 9.73 per cent.
In the last FY2023, the average inflation rate was 9.02 per cent, far higher than the government's target of 6.5 per cent.