In Bangladesh, CPI (Consumer Price Index) inflation was recorded at 6.2 percent in February, which is higher than the country’s central bank’s inflation target (5.3 percent) for 2022. Prices of some food items, namely Soybean oil, coarse rice, sugar, and flour, rose 44 percent, 34 percent, 32 percent, and 21 percent, respectively, in the last quarter of 2021 compared to the pre-Covid-19 level (the final quarter of 2019). Nevertheless, the biggest risk to inflation is energy prices which have been highly volatile given the war in Ukraine, and amidst this, the government is contemplating adjusting energy prices upward. If done, inflation may rise further, missing the central bank’s inflation target.
The rising food prices are particularly worrisome for the low-income and marginalized groups. A Centre for Peace and Justice (CPJ), Brac University’s longitudinal study supported by Covid Collective shows that both the mean and median monthly income of marginalized people comprised of rural poor, slum dwellers, and ethnic minorities living in the plain land and the Chittagong Hill Tracts was about 10 percent lower in December 2021 than the pre-pandemic level.
The CPJ’s panel survey conducted from June to December 2021 suggests cutting down food consumption (43 percent) followed by taking up low-wage jobs (33 percent) and dipping into savings (25 percent) were the most reported coping strategies of marginalized people. A little over one-third of households availed of loans in December, and purchasing food was a predominant reason for borrowing cash. Over 90 percent of respondents reported facing psychological problems due to households’ difficulties in securing food (78 percent) during the pandemic.
Amidst the pandemic rising food prices for essentials could further derail the recovery of marginalized households, as food, beverage and tobacco carry 58 percent of CPI weights which is even higher for rural households (61 percent).
Thus, given the income loss during the pandemic, insulating the marginalized populations from food inflation should be one of the government’s top priorities. In fact, this section of the population has high expectations from the government to recover from the pandemic. The overall proportion of households who think their community would be included in the government’s economic recovery initiatives increased in successive surveys of CPJ, with 56 percent of households showing inclination in December.
There are several ways that marginalized people can be protected from food inflation. One of the approaches is to use the existing support networks, including those extended during the pandemic, under the supervision of local government institutions. However, the coverage of those networks is not adequate as two-thirds of the households in the CPJ survey reported not receiving any support from any source in December alongside a decline in proportions receiving financial assistance and food support over time.
As cash values erode fast during inflation, more efforts should be given to provide food support to economically struggling households. The CPJ survey shows that about 10 percent of households had access to government-subsidized food. This coverage should be extended, ensuring marginalized groups are treated fairly in distributing family cards to purchase subsidized food from the Trading Corporation of Bangladesh. Besides, with nearly half of the households dissatisfied with the government’s food distribution, according to the CPJ survey, there is a need to assess the underlying causes.
To sum up, the dual shocks of the pandemic-induced income loss and food inflation make the marginalized communities extremely vulnerable. Inflation, in particular, is a de facto regressive tax that hurts the poorest most and worsens income distribution. The provisions of food support programmes designed and implemented to mitigate the pandemic’s adverse impacts should be revisited amid the rising prices of essentials. Here, microdata generated by CPJ can help map the specific needs of vulnerable groups based on different demographic and socio-economic indicators. The greater usage of household-level data in policy formulation can better cater to marginalised groups’ needs, protecting them from further vulnerabilities.
Disclaimer: All views and opinions expressed in this blog are those of the authors based on their analysis of empirical findings and do not represent the position of any affiliated organisations.