Food inflation in Bangladesh hit a 12-year high in August 2023 in contrast to declining food prices in the global market, according to local and international data.

According to the Food and Agriculture Organization of the United Nations food price index, international food commodity prices declined in August, led by staples other than rice and sugar.

The index showed that monthly changes in the international prices of globally traded food commodities averaged 121.4 points in August 2023, down 2.1 per cent from July and 24 per cent below its March 2022 peak.

At the same time, Bangladesh’s food inflation in August 2023 soared to a 12-year high of 12.54 per cent.

In the financial year 2010–11, food inflation in the country reached 14.11 per cent, according to the Bangladesh Bureau of Statistics.

Bangladeshi consumers are not getting benefits from the declining prices of food items in the global market due to weak market management, unavailability of data on demand and supply, and complexities in opening letters of  credit due to the shortage of dollars and devaluation of taka, said Centre for Policy Dialogue distinguished fellow Mustafizur Rahman.

Speaking to New Age on Tuesday, he said that intermediaries were widening the gap in commodity prices between imports or production and consumer points due to weakness in government monitoring.

The economist said that business people had been facing trouble importing essential commodities due to the shortage of dollars, and local traders were taking advantage of the situation.

Mustafiz said that soaring inflation in the country affects not only low-income people but also investors.

According to the Trading Corporation of Bangladesh Data, the prices of essential commodities, including atta, edible oil, red lentils, onion, garlic, sugar, and egg, have soared by 38 to 219 per cent in the past three years, from August 29, 2020, to August 30, 2023.

Former lead economist of the World Bank’s Dhaka office, Zahid Hussain, said that the price of essential commodities was not decreasing in Bangladesh due to insufficient imports, the high cost of fuel oil and gas, and a lack of market management.

The prices of commodities have been decreasing in the global market, but Bangladesh has failed to import the items in the required quantities due to the shortage of dollars, he said.

At the same time, the production of essential commodities is also being interrupted due to a lack of imports of intermediate goods, the economist said.

Zahid Hussain said that the price of fuel oil and gas decreased in the global market, but the prices remained high in Bangladesh.

The adjustment of the prices of fuel and gas could have reduced the production and transportation costs of goods, he said.

Sudden rises in the price of essential commodities one after another have been taking place in the local market as big players in the commodity business often try to take advantage of weak market management, Zahid Hussain said.

Commerce minister Tipu Munshi claimed on Tuesday in Jatiya Sangsad that due to increases in transport costs, the rate of the dollar, and the ongoing Russia-Ukraine war, the price of import-dependent daily necessities had increased.

The FAO Vegetable Oil Price Index decreased by 3.1 per cent in August, partly reversing a sharp 12.1 per cent upward move in July.

FAO data showed that world quotations for soya bean oil dropped owing to improving crop conditions in the United States of America, while those for palm oil fell moderately amid seasonally rising outputs in leading producing countries in Southeast Asia.

The FAO Cereal Price Index declined by 0.7 per cent from July, while international wheat prices fell by 3.8 per cent in August amid higher seasonal availability from several leading exporters.

It also showed that international coarse grain prices fell by 3.4 per cent amid ample global supplies of maize from a record harvest in Brazil and the imminent start of the harvest in the USA.