Inflation forces garment workers, farmers, freedom fighters to dip into savings

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Rise in cost of living due to high inflation forces many people with limited incomes to spend bank savings, finds a recent report of Bangladesh Bank.

According to the report, garment workers withdrew Tk 180 million from their deposits in the bank in the last quarter in 2023 (October-December). During this time, the farmers withdrew Tk 910 from their savings and freedom fighters withdrew Tk 1.46 billion from their bank accounts. On the contrary, students' bank savings have increased as bank deposits of students increased by Tk 2.05 billion in this period.

According to the BB, a total of Tk 3 billion was deposited in 903,000 bank accounts of the garment workers in the third quarter (July-September) of last year, which dropped to Tk 2.82 billion in the last. The number of bank accounts increased to 939,000 in the last quarter. Although the number of bank accounts increased, the savings dropped by 6 per cent.

The BB report shows a similar picture for farmers and freedom fighters. The deposit of farmers in the banks decreased to Tk 5.92 billion in the October-December period. There are around 150 million bank accounts belonging to farmers. The number of bank accounts has increased a bit in the last quarter. The deposit in bank accounts of freedom fighters has decreased by Tk 1.46 billion to Tk 8.63 billion in the last quarter.

Money for various benefits given by the government is deposited in the bank accounts of farmers and freedom fighters. Many withdraw the government financial assistance immediately after it is deposited to their accounts. Because of this, the amount of deposit in the accounts of farmers and freedom fighters usually fluctuates every few months.

The deposit in the accounts of students, however, increased in the last quarter compared to the third quarter. The accounts of students had Tk 22.93 billion deposited after the July-September quarter. After three months, the deposit increased by Tk 2.05 billion. The student account also increased by around 175,000.

The economists blame high inflation behind the trend of decrease in deposit from the bank accounts of farmers, workers and freedom fighters. They maintain that the lower-income people are struggling hard to meet ends due to the spiraling cost of living. The situation is so bad that many withdrew their savings from the banks to adjust with the price hike.

According to the latest data from Bangladesh Bureau of Statistics (BBS), overall inflation increased to 9.81 per cent at the end of March. The rate was 9.67 per cent in February.

According to BBS data, both food and non-food inflation rose in March. Food inflation rose to 9.87 per cent last month, while non-food inflation rose to 9.64 per cent.

A report by Center for Policy Dialogue (CPD) last March revealed that a family of four members in Dhaka city needs Tk 22,664 every month only for food. A middle income family has to spend 60 per cent of its income on food only.