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Inflationary pressure hurts low-income families: New Survey

Published : 05 Jun 2022 11:50 PM | Updated : 06 Jun 2022 03:54 PM

The current inflationary pressures has eroded the real income and adversely affected food security and essential expenditures of the low-income households in Bangladesh.

This has also significantly disrupted their economic recovery from the COVID-19 shock, says a latest survey.

In a virtual press conference on Sunday, titled “Inflation, Coping, and Recovery Challenges” Dr Hossain Zillur Rahman, executive chairman of Power and Participation Research Centre (PPRC), and Dr Imran Matin, executive director of BRAC Institute of Governance and Development (BIGD), highlighted these trends.

They presented these findings from the latest round of a survey in a joint PPRC–BIGD study, which has been capturing, since April 2020, the evolving economic crisis among low-income communities in Bangladesh due to COVID-19 through multiple rounds of surveys among a large sample of urban slum and rural population.

Almost 4,000 households were surveyed in the fifth round conducted in May this year, according to the survey. They show that per capita daily incomes were steadily recovering after the second lockdown—which increased by a 27% from August 2021 to January 2022— but have started reversing again by a 6% between January and May 2022 due to inflation, disrupting the expected recovery of real incomes to that of pre-pandemic times.

Dr Rahman said inflation has compounded the COVID-induced disruptions to economic recovery, with real incomes of poorer households still 15% below pre-COVID levels two years from the onset of the pandemic.

The recent fall in daily per capita real incomes in the urban slums (8%) has been sharper than that in the rural areas (3%).

Livelihoods in urban slums were already more severely affected by COVID and recovering more slowly, compared to those in villages.

The inflation has further slowed the recovery in the slums, according to the survey.

The inflationary pressure also appears to have pulled more women to find work; 40% of female respondents in the survey were engaged in income-generating activities in January, which jumped to 52% in May.

Because of rising prices, most of the surveyed households have drastically reduced or stopped the consumption of major food items such as fish, meat, milk, and fruit, since February, according to the survey findings.

As of May, one in five urban slum households had also skipped at least one meal in the last month due to a lack of money.

Compared to August 2021, more households were depending on their own incomes and production for their food needs in May 2022, as opposed to loans, dues from shops, and help from relatives, according to the survey.

This seems to be a positive development. However, 38% of the households also said they needed to borrow more money but could not, mostly because of reasons like inability to repay or existing large debt burdens, indicating that many of these households are under severe financial stress.

Compared to last year, the purchase of fair price rice has increased in May 2022, among both people below and above the poverty line.

There has been a corresponding change in the purchase of TCB food, 38% of surveyed HHs bought from TCB since February 2022. Despite this, there is a large unmet demand.

The survey indicates to the need for a vast expansion of TCB and similar programs for poor urban and rural households.

More than half of the households believe that the price hike is due to governance issues. The majority want the government to punish the syndicates and corrupt businesses, while a third suggested reducing prices, particularly for low-income households.

The national estimate of the “new poor” remains high at 18.54% in May 2022 due to inflation and the slow recovery among the vulnerable non-poor, according to the survey.

“The inflation induced reversal comes within a larger context of multiple prolonged crises,” said Dr Matin.

“Government action for the informal sector and the poor will be critical at this time, and this needs to protect both consumption and production capabilities. Social protection needs to be reimagined to align with our challenges and ambitions.”

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