Mohammad Shaheed from Ashkona Dakshinkhan of the capital, is a driver and earns 25-30 thousand taka a month. He can no longer meet afford house rent, children’s education, shopping and healthcare costs with his income. His costs have soared over the past couple of years, but not his income. His dues to the local grocery shop have increased as well, and sometimes he even needs to borrow from others at the end of the month to keep up with the rising expenditure.
He told Prothom Alo, “Prices of essentials including rice, lentils, sugar and edible oil have increased significantly over the past one and a half years, but the car rental business has not grown that much." That is why it has not been possible to maintain the family with the prior amount of income and he was forced to shift from an apartment to a tin-shed house several months ago.”
Like driver Mohammad Shaheed, people with low and limited income brackets have been struggling with low income and rising expenditure over the past two years. Prices of essentials have largely reached out of their hands. They have been compelled to cut their daily grocery lists and to borrow to meet family spending.
Inflation, according to the state-run Bangladesh Bureau of Statistics (BBS), has been rising at a higher rate than wage hikes in the country over the past 24 months, resulting in a drop in people's purchasing power. As a result, poor and limited-income people are struggling to maintain their spending.
Rice prices have been fluctuating over the past two years. The price of coarse variety is now over Tk 50 a kg, while the price of fine variety, according to the state-run Trading Corporation of Bangladesh (TCB), stands at Tk 76 a kg. Prices of onions, potatoes and pointed gourd doubled in two years. Rui fish is sold for no less than Tk 300 a kg, pangas for no less than Tk 180 a kg and broiler chicken for over Tk 200 a kg. Soybean oil was sold for over Tk 200 a kg in 2022, but the price has fallen to Tk 164 a kg now.
With rise in food prices, people face mounting suffering because they mostly spend more than half of their income to buy food. Economists said poor people spend up to two-thirds of their income on food. A recent World Bank report said 71 per cent of people are concerned over food prices.
Centre for Policy Dialogue (CPD)'s distinguished fellow professor Mustafizur Rahman told Prothom Alo, “Other than a few sectors including the readymade garment sector, no minimum wage has been fixed in the remaining sectors. A 5 per cent rise in salary and allowance in the government sector is also less than the inflation rate. People are struggling to buy food as per their demands due to the gap between income and expenditure. As a result, data from World Bank, World Food Programme and BBS found nutrition disparities growing in the country.”
Inflation tops 9pc
Inflation has topped 9 per cent for more than 14 months straight since March 2023. The inflation rate was 9.74 per cent in April this year, and that means one must spend Tk 9.74 more to buy similar products that one purchased at Tk 100 in March last year
Like taxes, inflation puts pressure on the poor and the rich alike. Nowadays, high inflation has become a big challenge for the economy. Food inflation crossed 10 per cent again last April.
Global prices skyrocketed when the Russia-Ukraine war broke out in February 2022 just after the Covid-19 pandemic. The dollar price also rose in the country, affecting prices and, thus, triggering inflation. A recent World Bank report predicted prices of six out of 10 products that Bangladesh imports will see a downtrend and four of them will see an uptrend.
Less wage hike than inflation
People do not face problems if income and prices rise proportionately. Government ministers once countered critics with such arguments, but the rate of wage hike has been less than the rate of inflation for the past two years, and usually, inflation remains 1-2 per cent less than the rise in wages.
Inflation crossed the national wage hike rate in May 2022. According to BBS, wages rose by 6.38 per cent and inflation by 7.4 in that month. Since then, wage hikes never exceeded the inflation rate.
The national wage hike rate was 7.85 per cent and inflation was 9.74 per cent last April. BBS assessed the wage hike based on 145 low-skilled professions across the country, and this huge population mostly bears the burden of inflation. According to BBS, 86 per cent or 60 million of the total population work in informal sectors in the country.
Regarding this, a BBS official told Prothom Alo on condition of anonymity that people in the low-income bracket feel more pressure when inflation rate exceeds the wage hike rate as they must cut family spending, downsizing their living standards.
Minimum wage of 18 sectors expired
Usually, the minimum wage structures announced for workers in various sectors expire in five years and there are currently 42 such sectors. According to the last report of the Minimum Wage Board, the minimum wage structures of 23 sectors have expired.
These sectors are: type foundry, petrol pumps, ayurvedic factories, iron foundries and engineering workshops, oil mills and vegetable products, salt crushing, cold storage, unskilled adult workers and child workers in privately-run factories, cinema halls, match industry, jute press and baling, Bangladesh land ports, hotels and restaurants, soaps and cosmetics, pharmaceuticals, tea packaging, shipbreaking, tanneries, tailoring factories, cotton textiles, bakeries, biscuits and confectioneries, automobile workshops, aluminum and enamel.
Minimum wage structures of several sectors have expired for over 19 years and the minimum wage is Tk 521 to 7,820 in these sectors.
CPD's professor Mustafizur Rahman said there should be strong steps in the next budget to control high inflation. Increase of family cards, undertaking new programmes for the poor and school midday programmes – these programmes should increase. Political decisions will be required to undertake these initiatives to control inflation. Besides, attention must be given to market management and monitoring, and institutional good governance has become more essential than ever before.
*This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna