The New Nation - Internet Edition

Pulack Ghatack

Slow response to global price cuts against speedy response to rumours of price hikes has been contributing to inflation in Bangladesh.

Market in Bangladesh is still warm though prices of foodstuff and other commodities fell sharply in the international markets. The average inflation rose to 10.01 per cent in August 2008 from 7.78 per cent a year ago, Bangladesh Bureau of Statistics (BBS) estimates.

Inflation, in point to point estimates, however, showed an insignificant drop to 10.11 per cent in August from 10.82 per cent in July, BBS sources said.

As a result of rising food prices and general inflation, more than half of the country's 145 million population is now food insecure and nearly one-third is understood as severely food insecure, a combined report by FAO and WFP says.

The wholesale and retail prices of coarse rice, the nation's major food staple, have increased by 78 and 82 per cent, respectively, from June 2006 to June 2008.

Rapid price rise of rice and other essential foods is putting immense pressure on the poor urban and rural households, forcing them to abandon consumption of protein foods and causing an increase in malnutrition at all levels.

However, the ongoing financial turbulence has shaken the global commodity market resulting in shedding prices of fuel, edible oil, rice and cereals significantly.

The financial crisis, creating a credit and liquidity crunch, has resulted in sell-offs in major commodities and pushed the prices down worldwide.

Oil price, which hit a record at $147.27 a barrel in July this year, now hovers around $75. Prices of rice and edible oil also went down much in the last couple of months.

But, the businessmen and the policymakers in Bangladesh are yet to respond to the global price. Prices of edible oil, which slide heavily in the world market, slipped slightly in the domestic market in view of a hue and cry by the media.

The Finance Minister Mirza AB Azizul Islam last month pledged to review oil prices in the domestic market responding to its global price, which is yet to be materialised.

Meanwhile, the number of Bangladesh's poor, who make up nearly half of its 153 million population, are rising because of high food prices, the International Monetary Fund (IMF) said in its latest report published on Thursday.

Although Bangladesh's macroeconomic growth has been "remarkably resilient" amid last year's repeated natural disasters and global increases in food and fuel prices, life has become more difficult for a large segment of its population, the IMF said.

According to a report of FAO and WFP, Bangladesh's undernourished population has increased by 7.3 million -- from 39.6 million to 46.9 million -- largely because of the impact of higher food prices and the damage of Aman rice last year.

The report says that the increase in food prices has raised the number of the Absolute Poor by 9 million people, to a total of 80 million (58.3 in rural and 21.4 in urban), and raised the prevalence of undernourishment to over 55 percent.

Bangladesh had estimated that more than 40 per cent of its people live below the poverty line, but the recent food crisis and cost of living increases have added significant numbers to the poverty list.