Inflation remains steady despite soaring commodity prices

Tuesday, 30 November 2021

Bangladesh's general rate of inflation held steady in October even as the prices of most commodities have spiralled in recent months.

The point-to-point inflation rate last month was 5.70 per cent, down from 6.44 per cent a year earlier, according to data published by the Bangladesh Bureau of Statistics on Monday, reports bdnews24.com.

In September, the general inflation rate was 5.59 per cent.

Despite concerns over the prices of kitchen staples, food inflation went up by a fraction to 5.22 per cent between September and October, although the hike in fuel prices is likely to have a bearing on the index next month.

The government set an inflation target of 5.3 per cent for fiscal 2021-22 to prevent a price spiral as the economy claws its way out of a pandemic-induced slump.

Notably, both rural and urban inflation rates have seen a marked year-on-year drop in October. The rural index stood at 5.81 per cent, down from 6.67 per cent the year before, while the urban inflation rate was more than half a percentage point lower at 5.50 per cent during that period.

The key economic indicator is calculated as a weighted average of about 650 products, according to the national statistics agency BBS’s Director-General Mohammad Tajul Islam.

Meanwhile, the average retail price of rice in Dhaka was Tk 62.53 last month. The average price of the commodity in 2020-21 was Tk 61.93.

Addressing the matter, he said, "The BBS isn't Dhaka-centric as it also calculates the prices of about 600 products from 64 districts across the country. Therefore, it is not possible to pinpoint any product that can affect inflation due to a price change."

However, Tajul believes changes in the price of the staple could have a "big impact" on inflation.

"Perhaps the price of rice was lower in October compared with last year. This can reduce the inflation rate."

Ahsan H Mansur, executive director of Policy Research Institute, acknowledged the breadth of products that the BBS takes into account to determine the index. "But everyone thinks that the government's index does not match the reality of the general people," he said.

"It's a common complaint of ordinary people now," added Ahsan.

According to the latest BBS inflation estimates, the point-to-point general inflation eased to 5.70 per cent in October 2021.

While the food inflation rate saw a year-on-year decline, the non-food index paints a different picture.

Non-food inflation ticked up to 6.48 per cent in October, compared with 5 per cent at the same time last year.