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The general inflation reached an 8-month low at 9.41 percent in December 2023, primarily driven by a notable 11 percent decline in food inflation compared to last month, hitting 9.58 percent. Non-food inflation was 8.52 percent, raised by 4.4 percent month-on-month.

The national average price of LPG for cooking continued to increase since August 2023, further rose by BDT 23 in December hitting BDT 1,404 per 12 kg cylinder (gas-only price), driven by the dollar and fuel crises

In the domestic retail markets, month-on-month prices of basic food commodities like animal protein sources (poultry, egg, fish), green chilli, fresh fruits and vegetables considerably reduced, while prices of rice, wheat, potato, onion, garlic, sugar and edible oils increased compared to the previous month.

There have been no rice imports during the July-December period, wheat purchases in this period were more than double year-on-year. The government has put a higher emphasis on normalizing wheat to stabilize the excessive domestic price pressure. Total imports in this period were 34 percent higher year-on-year (Ministry of Food).

The monthly cost of a typical food basket (national) decreased by BDT 34 in December hitting BDT 2,799 per person per month with falling food inflation, despite increase in retail prices of major food commodities. The adjusted energysufficient basket price in Cox’s Bazar reached BDT 1,589, reduced slightly compared to last month.

The War in Ukraine, Global Markets and Conflict in Gaza – Impact on Bangladesh

Global economic crisis since 2022, coupled with geopolitical risks have continued to threaten the overall economic outlook, whereas recovery remains slow with growing regional divergences. The conflict in Gaza and the ongoing war in Ukraine imposed a further burden on the COVID exhausted fragile global economy. The growth has been forecasted to slow down by 2.9 percent in 2024 from the baseline growth rate in 2022. Bangladesh is no exception, with an economic standpoint even weaker than during thethe pandemic. Inflation had surged to record levels, foreign currency reserves plunged, the value of BDT depreciated , export growth slowed , remittance inflows did not live up to expectations, and the banking sector saw major challenges contributed to the economic crisis In addition, the political unrest during the latter part of the year has worsened the crisis and distressed small traders and low-income groups.
Production inputs such as energy, fuel and fertilizers prices remained significantly high due to the lingering effects of the war in Ukraine and the associated trade restrictions.

Along with the issues of import barriers and global unrest, challenges within the unstable banking sector exacerbated by poor monetary policy, lack of internal governance and reforms have been a big challenge for the country to recover from the crisis. The government has recently taken various policy measures to restore macroeconomic stability, which include improving the balance of payment situation, reforming export prices and stabilising the exchange rate of foreign currency.

The geopolitical and macroeconomic unrests have been contributing to rising global food insecurity and increased vulnerabilities. The Global Report on Food Crisis, updated in September 2023, revealed 238 million people facing high levels of acute food insecurity, 10 percent higher compared to 2022. WFP’s mVAM survey in December 2023 showed that more than 31 percent of low-income households were food insecure. 68 percent of the sample households had to adopt livelihood-based coping strategies; about 71 percent reported the rise in food prices as their deepest concern.

Global food Indices

The FAO Food Price Index (FFPI) , which measures the monthly changes in international prices of a basket of food commodities, averaged 118.5 points in December 2023, down by 1.5 percent from last month. The December index was 10 percent lower year-on-year, and about 26 percent below the peak it reached in March 2022. The month-onmonth fall in the index reflected a huge fall in the price indices for sugar and, a moderate fall in vegetable oils and meat prices, offsetting the increases in dairy products and cereals.

FAO Cereal Price Index in December rose by 1.5 percent from last month, averaging 122.8 points. The price uplift was due to an increase in rice and wheat prices this month in the international markets. Wheat export prices increased after falling for four consecutive months driven by weatherrelated logistical disruptions in some major exporters as well as enhanced demand. The monthly Rice Price Index rose by 1.6 percent in December on the back of reduced competition among exporters owing to India's export restrictions contrasting the impact of El Niño on rice production. The Index was 10 percent below its corresponding level one year ago.

The FAO Price Index of sugar declined by 17 percent, and that of vegetable oils by 1.4 percent month-on-month in December 2023. The monthly prices of dairy products, on the other hand, raised by 1.6 percent in this month. The overall decline in the FFPI in December 2023 was driven by increased export prices, logistical constraints hindering shipments from the origin and export restrictions imposed by India. The International Grains Council’s (IGC) Grains and Oilseeds Index (GOI) – a measure of changes in major export quotations for a basket of commodities worldwide – went stable as last mont at 258 points in December 2023, but 16 percent lower compared to the same period last year.

Source : reliefweb