Measures to meet inflation-driven economic crisis

When the common people are finding it hard to make both ends meet due to uncontrolled price hike of essentials, the diminishing value of taka has further compounded their suffering. Clearly, their real income has been falling in direct proportion to the depreciation of taka vis-à-vis US dollar. When this is the situation affecting public life, the inflation figures provided by the official statistical agency hardly match the reality. The official price inflation figure for April is 6.29 per cent. In that case, the question that of necessity arises is the base year and the price of the standardised good or service that is being used to arrive at the official figure for price inflation. Needless to say, this mismatch between the official data on inflation and the existing price volatility in the commodities market warrants an explanation from the Bangladesh Bureau of Statistics (BBS), the chief source of government statistics.

It is against this backdrop that a local economic think tank raised the issue at a recent press briefing in the city. With the living standard of common people constantly falling thereby further widening income inequality in society, the country's striving for attaining sustainable and inclusive growth is facing an obvious challenge. But since the official recognition of the fact is not forthcoming, economic experts at the meet-the-press event duly expressed their concern over it. And in the same breath, they also advised policymakers in the government to adopt urgent as well as medium-term measures to address challenges facing the economy. And since price inflation index plays a critical role in framing monetary policy by the central bank, its import in adopting the government's fiscal policy cannot also be gainsaid. So, in the interest of taking appropriate measures to tame the price surge in the essentials' market in the upcoming budget (FY2022-23), the government will be required to spell out its position on inflation figures more convincingly. And to that end, if necessary, it should review the consumption basket for the Consumer Price Index (CPI) based on a more rigorous research methodology.

Surveys conducted by other private research groups have also found out the worsening of the economic crisis among the low-income urban and rural communities. Disturbingly though, the surveyed population who had been commendably clawing back their incomes lost to the Covid shock between August 2021 and January 2022, has again found themselves in the troubled waters of price inflation. For, as the surveys found, from the beginning of the current year until May, they actually lost 6 per cent of the income gain they could make in the post-pandemic period until the end of 2021. Obviously, it is the runaway price inflation that has brought down their incomes to 15 per cent below those of the pre-Covid levels. To add to this, the inflation-induced fall in the real income has been found to be more pronounced among the urban poor than the rural ones.

To meet the inflation-triggered crisis, the government will be required to adopt a raft of measures including withdrawal of various duties and taxes on food grains import and increasing substantially the Open Market Sale (OMS) of essentials in the market. At the same time, direct cash support to the poor needs also to be enhanced. By adopting various pro-poor measures, the government, hopefully, will be able to tide over the ongoing crisis born of the inflationary pressure on the economy.