Inflation Accounting Across Income Groups: Does Inflation Hurt the Poor More in Bangladesh?

This note provides estimates of the contribution of food prices to inflation in Bangladesh. The results suggest that the current inflation takes a bigger toll on the poor because they spend more of their income on food. The note calculates inflation rates separately for two poor groups, the hardcore poor and the moderate poor, as well as for the middle income group and the rich. The results indicate that recent inflation is mainly driven by higher food prices; and the inflation rate faced by the poor exceeds the corresponding rates for the non-poor groups. The results highlight the importance for the government to follow pro-poor growth and anti-inflation policies to mitigate the adverse effects of recent inflation on the poor.