Bangladesh Market Monitor - July 2024

In the 1st month of the fiscal year (FY) 2024-25, the general inflation rate increased to a 12-year high hitting 11.66 percent owing to a record climb in food inflation. This is the first time the country's general inflation has reached double digits, it was 20 percent higher than last month. The food inflation soared to 14.1 percent observing a month-on-month jump of as high as 35 percent due to nationwide unrest in July that led to a supply chain disruption followed by higher food prices. Non-food inflation also increased by about 6 percent hitting 9.68 percent in July. Year-on-year, general inflation in July was 20 percent higher, and food inflation was about 45 percent higher. Both rural and urban food inflation were also inclined exceptionally and reached above 14 percent in July 2024.

Bangladesh Economy: The country's month-on-month gross foreign exchange reserve fell again in July 2024 hitting USD 20.4 (as per BPM-6 method) billion compared to USD 21.7 billion in the previous month2 due to lower inflows than outflows for payments and imports. The official exchange rate has been increased from BDT 110 per USD to BDT 117 per USD since early May 2024, the rate was BDT 117.9 per USD in July 2024.3 Remittance inflow dropped to a 10-month low in July standing at USD 1.91 billion, about 25 percent lower compared to the previous month because of the national unrest, internet blackout and subsequent bank closure.

The national average price for Liquefied Petroleum Gas (LPG) slightly increased in July 2024 by BDT 3 as compared to last month hitting BDT 1,366 per 12 kg cylinder (gas-only price). The Bangladesh Energy Regulatory Commission (BERC) adjusted the cooking fuel prices for the domestic market considering the variations of contract prices (CP) in importing countries like Saudi Arabia, along with fluctuations in foreign exchange rates and changes in the value-added tax (VAT). Monthly LPG prices in Cox’s Bazar decreased this month by BDT 10 reaching BDT 1,360.

In the domestic retail markets, month-on-month prices of basic food commodities including wheat, potato, palm oil, onion, green chili, and most fresh vegetables significantly increased in July 2024 corresponding to the high food inflation. However, prices of rice, chicken, egg, garlic and sugar decreased in comparison to the previous month. Prices of lentils and soybean oil remained stable in the national domestic markets. A similar price trend was observed in the retail markets of Cox’s Bazar (Price details in Annex I and II).

The country has experienced a gradual increase in wheat imports during the recent years. In the just concluded FY, wheat imports rose by a record 71 percent year-on-year. Dietary diversification and changing consumption patterns could be the driving factors for the boost. However, there has been no rice import in the departed FY 2023-24. Enhanced domestic rice production and high international market prices have made rice imports less economically viable. Total foodgrain imports in this FY were 6.63 million mt, 36 percent higher from the previous FY 2022-23, 4.9 million mt. In the new FY 2024-25, the Ministry of Agriculture has set an annual foodgrain production target of approximately 44.7 million mt, of which 4 million mt Aus, 17.2 million mt Aman, 22.3 milliom mt Boro, and 1.2 million mt wheat. In contrast, the public sector has set a 1.05 million mt food grain imports target for this FY, comprising 0.35 million mt of rice and 0.7 million mt of wheat (Ministry of Food).

The monthly cost of a food basket (National) in July 2024 increased slightly by BDT 10 from last month – reaching BDT 2,995 per person per month on the back of a record high food inflation. The composition of the food basket for Ukhiya has been revised in December 2023 considering dietary energy requirements. The market prices to calculate the cost of food baskets were collected from the surrounding markets outside the camps. According to the adjusted basket value, the cost of a food basket (with normal rice) reached BDT 1,589 in July 2024, increased by BDT 27 from the previous month. In July 2024, the daily wage for typical labor in the Ukhiya sub-district could buy 11.5 kg of rice from a day’s wage of BDT 550. The cost of a food basket for Bhasan Char in July 2024 was BDT 1,678 against the WFP voucher value of USD 157 – about 6 percent higher as compared to that in Cox’s Bazar primarily due to the added logistics costs of sourcing food from the mainland.