Why is old survey being used to calculate food inflation?

It is deeply troubling that official inflation figures in Bangladesh do not reflect the actual situation in the country, as a recent study has found out. The study, done by the South Asian Network on Economic Modeling (SANEM), reveals that food inflation faced by the poor is more than twice what the official data claims. This is mostly because the state-run Bangladesh Bureau of Statistics (BBS) still calculates inflation based on the old Household Income and Expenditure Survey (HIES) of 2005-06, which is really surprising given that the latest data of HIES 2016 has been available since 2017. Because of using data from the old base year, the stress that economically marginalised households are suffering in the wake of price hikes remains underestimated.

According to the BBS, in January this year, food inflation in the urban and rural areas was 4.85 percent and 5.94 percent, respectively. But the SANEM study found that it was actually 11.36 percent in urban areas and 11.21 percent in rural areas. The study has found that the food consumption baskets of the selected marginalised household groups are concentrated on much smaller items than the food baskets used by the BBS. The consumption patterns of the households calculated by the BBS were derived from the HIES of 2005-06—in which 422 commodities were included in the urban consumer basket, while the rural basket consisted of 318 food and non-food items. But the meal patterns of people have changed a lot since 2005-06.

The SANEM study also found that the average food consumption is 61.13 percent of the total consumption expenditure of urban marginalised household groups, and 65.36 percent of the total consumption expenditure of rural household groups. These are much higher than the food shares used by the BBS in their CPI (Consumer Price Indices) calculation: 45.17 percent for urban areas, and 58.54 percent for rural areas.

The danger of such inaccurate and exaggerated data cannot be overestimated, as official response almost always depends on the BBS data. It also means that while the pandemic has been continuously affecting people's income and employment, creating new poor and increasing their vulnerabilities, the poor are having to struggle with huge inflationary pressure. This is totally unacceptable. We urge the government to undertake proper assessment of the market's demand and supply situation. Also, the government's social protection coverage needs to be expanded to include all old and new vulnerable segments of population in its schemes.