By Motaher Hossain

When inflation continues unabated, it causes instability in the market. People’s purchasing power and economic ability decrease. In this situation, those near the poverty line quickly fall deeper into poverty. Those already living below the poverty line sink further into deprivation. People in these circumstances often become unemployed and turn to different ways or methods for earning a livelihood, which are not the normal paths. When lower-income people fall below the poverty line, they lose their purchasing power. Along with this, they suffer from hunger and malnutrition, leading to various health problems. At this stage, law and order also deteriorates, and there is an increase in crimes such as theft, robbery, and even murder. As a result, social unrest emerges. Some signs of this are already visible today.

To manage this situation, the government has taken an initiative by printing an additional 22,500 crore taka to address the crisis of bankrupt banks and control inflation. The Governor of Bangladesh Bank recently informed the media about this step, but he commented that this measure is temporary.

Although market inflation is often blamed on cartels, no visible action has been taken to break up these cartels or bring them under legal control. Unfortunately, even though import duties on products like sugar, soybean oil, onions, and rice have been reduced, the prices in the market have not been affected. Instead, these reductions seem to benefit importers, as the money saved on duties ends up in the pockets of business owners, while the national treasury is drained. One proposal is to recover the amount saved by importers from reduced duties in the past and redistribute it to help the poor in other ways. Another suggestion is to control market prices by importing the relevant products through the Trading Corporation of Bangladesh (TCB) and distributing them to consumers, instead of reducing import duties.

Despite government statistics showing a decrease in poverty, an increase in the prices of daily necessities, coupled with stagnant wages, has pushed 1.78 crore people into poverty or at risk of it in the last two years. According to a teacher from the Department of Economics at Dhaka University, this new poverty rate accounts for 10% of the country’s population. This alarming statistic has raised concerns. During a recent workshop organized by the private research organization Research and Policy Integration for Development (RAPID), Associate Professor of Dhaka University’s Department of Economics, Md. Din Islam, presented these figures. He recommended increasing allocations for food security and social safety programs.

Din Islam shared his research findings, stating, “In the last two years, 7.86 million people have fallen below the acceptable poverty line, while 9.83 million are now at high risk of poverty. In this period, 3.8 million people have moved from being poor to ultra-poor.” However, this study was based on inflation and wage growth rates, without conducting a field survey. The study used internationally recognized poverty and ultra-poverty lines to assess the loss of purchasing power.

The researchers analyzed government-provided data from the Bangladesh Bureau of Statistics (BBS) on inflation and real wage differences. They found that in the 2023-24 fiscal year, over 6% of people have lost their purchasing power. As a result, they have either fallen into poverty or are at risk of doing so. According to the latest BBS data, the poverty rate in the country stands at 18.7%, down from 24.3% in 2016. However, the rate of extreme poverty increased from 12.9% in 2016 to 5.6% in 2022.
According to the most recent data, inflation in November was 11.38%, slightly up from 10.87% in October. Food inflation reached 13.80% in November, compared to 12.66% in the previous month. The average wage increase during the same period was 8.10%. This reflects that wage growth is consistently lower than inflation.

Din Islam blames the government’s “wrong policies” for inflation. He pointed out that the central bank has increased the supply of money by printing one lakh crore taka in just one year. The amount of debt from the central bank has tripled, reaching 1,487.73 billion taka, compared to 481.42 billion taka a year ago. The loan taken from the central bank in the 2022-23 fiscal year was twice as much as the total loans taken in the last 50 years.

In the workshop, Shafiqul Alam, Press Secretary to the Chief Adviser, joined virtually and claimed that the previous government manipulated statistics, while the current government is not doing so, which is why the inflation rate appears higher. He emphasized that the government is determined not to engage in any manipulation. He assured that the government is making efforts to bring food prices and inflation under control.

Meanwhile, Professor M. Abu Yusuf, Executive Director of RAPID, suggested that reallocating just 2.3% of the current development budget towards food-related social protection programs could double the existing allocation for these programs. The three major programs in question include the Food Friendly Program, Open Market Sales (OMS), and the Food-for-Work program. However, according to the latest government information, the Food Friendly Program and the Food-for-Work program are currently operating on a limited scale, and OMS has not been widely expanded in rural areas. These programs need to be expanded further to include the poor, the middle class, and a larger portion of the population.

To control inflation and make the prices of essential commodities affordable, it is essential to take immediate and effective measures. There is widespread expectation that the interim government, led by Dr. Muhammad Yunus, will take swift action to stabilize the economy.

The writer is a Journalist, General Secretary - Bangladesh Climate Change Journalists Forum