Bangladesh Bureau of Statistics (BBS) is making radical changes in the inflation calculation considering the present financial situation and the IMF suggestions.
The inflation will be calculated for the base year 2021–22 instead of the existing base year of 2005-06, which will be more accurate as lifestyle and consumer behaviors made a big change in the present time, the BBS sources said.
According to the BBS, in the new base year, the changes in consumption patterns of people during the last one and a half decade have been prioritized. For example, in the base year 2005-06, inflation was calculated using only 426 goods and services. About 300 more products and services are increasing in the new base year.
There will be a total of 722 products and services as new, which will be calculated by taking 100 points and the contribution of these products to inflation.
In this case, the contribution of rice will be 13. The remaining 721 products and services contributed 87. For the first time, the contribution of non-food products and services is crossing 50 percent. This means people spend more on consuming other goods and services than buying food, BBS official said.
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Former chairman of NBR Dr. Muhammad Abdul Mazid told UNB that a new base year is definitely needed. But the list of food products should be changed drastically.
“Around 80 percent of the current diet is carbohydrate-based foods. Food products should be listed with nutritional values rather than calories. This needs to be openly discussed with all stakeholders,” he said.
Inflation has been high in the last six months due to Covid-19 pandemic and the Ukraine-Russia war. Since then, economists are arguing that the current system does not capture the correct picture of inflation.
They believed that the inflation is actually higher.
Meanwhile, the government has committed to the International Monetary Fund (IMF) to change the base year in inflation calculations.
According to this reform proposal, the BBS will calculate inflation from the new base year and method from next July. As a result, the BBS officials expect that the consumption and consumption trends of people will be illustrated more clearly.
In addition, officials believe that long-held doubts among many economists about inflation calculations will be diminished, the BBS official said.
The BBS has already been changed to a base year and the list of goods and services has made finalized. The pilot program for calculating inflation in the new base year will begin next month.