Salaried people give up on savings to grapple with rising food inflation, cost of living
A newborn usually brings a sense of happiness to family members and relatives, but the joy of becoming the parents of a second child is tinged with worries for Rafeza Khanam and her husband.
Concerns over the means to build a better future for children are occupying much of the couple’s thoughts.
“Our capacity to save is shrinking for rising living costs. It worries me,” said Rafeza, a mid-level banker, who is expecting a baby by the year-end.
The couple had scopes for saving money just seven months back. But their capacity to save started to shrink since the beginning of this year for soaring household expenditures.
Their house owner hiked the rent by 40 percent to Tk 7,000 for a two-room apartment at Goran in the capital, putting additional burden on their average monthly income of Tk 40,000.
The couple’s household expenditures rose by Tk 10,000 to Tk 35,000 in the last one year forcing them to discontinue one of their two savings schemes.
Like them, people on fixed income lose out to soaring costs of rice and other essentials that contributed to a rise in average inflation to 8.80 percent at the end of the last fiscal year from 7.31 percent in the previous fiscal.
Prices of essentials such as cooking oil, onion, sugar and vegetables maintained their upward spiral in the last one month.
Retailers now sell unpacked soybean oil at Tk 109-110 a litre, 50 percent higher than what was a year ago, and palm oil at Tk 96-99 per litre, 45 percent higher on the previous year price. Bottled cooking oil has also become dearer.
Onion price jumped by 43 percent to Tk 28-38 a kg in the last two months.
Sugar that was sold at Tk 48-50 during this time last year, shot up to a record high of Tk 65-70 this week, according to Trading Corporation of Bangladesh.
Flour, pulses, vegetables, milk power and processed food also saw a spike in their prices.
Moreover, transport fares went up while the overall income of most people has not increased keeping pace with the rise in the cost of living.
Many people like Mohammad Hanif, a fourth-grade worker at Dhaka University, or Shahnur Akhter Juthi, a housewife, have cut consumption of cooking oil, meat and fish.
”It is really hard to cope with soaring living costs,” said Juthi, who manages a family of four with the moderate monthly income of her husband.
”Everything has become pricier. If you want to buy a tiny bundle of leafy vegetable, it will cost you at least Tk 15,” she said.
Juthi now buys less vegetable, fish and meat or egg to keep the family’s budget for food under Tk 8,000 a month.
”I cannot cut the expenses for my kids’ schooling, so I have reduced consumption of food,” said Juthi, the wife of a drama producer.
For many, a cut on family budget is not enough. Many families see their monthly income drying up before the end of month, and fall in the loan trap.
Mohammad Kanchan, who earns Tk 8,500 a month on an average by selling tea at a roadside stall at Wari, said, ”I can hardly eat the dishes I want. I just stick to the bare minimum.”
He pays Tk 5,000 in rent for a shanty and the tea stall, and spends the rest of his earnings on food and other household needs.
Kanchan said it was much easier for him to run a family of two with Tk 3,000 a month early this year.
The living cost has now gone beyond Tk 3,500 a month, forcing him to borrow at the end of almost every month, said Kanchan. He is hesitant to increase the price of tea from Tk 4 to Tk 5 a cup, lest his customers, mostly rickshaw pullers, stop coming to his shop.
Rushidan Islam Rahman, research director of Bangladesh Institute of Development Studies, said the rise in coarse rice prices has caused an erosion of real income for low income people.
Such erosion may adversely affect their nutritional standard. It also leads to a fall in savings as they have to spend more to meet the basic needs, she said referring to the Household Income and Expenditure Survey, 2010.
The survey shows savings rate in 2010 was only three percent of income compared to 15 percent in 2005, said Rushidan.
Courtesy of The Daily Star
