A hike in food prices [or drop in income] lowers the consumption of rice slightly but it reduces the consumption of fish, meat, fruit and other nutritious food items sharply, according to the latest research by the Bangladesh Institute of Development Studies (BIDS).
Dr Wasel Bin Shadat, an econometrician and researcher of BIDS, presented the key points of the research titled "What do we learn about household food demand patterns and elasticities from micro-data in Bangladesh?" at the fortnightly seminar of the policy research institute at its office in the capital on Wednesday.
He said the price of rice increased by about 20% in the first lockdown of the Covid-19 period but its consumption decreased only by 4.96% at that time.
But the price hike of rice pushed people to reduce consumption of pulses by 2.34%, fish by 5.08%, meat by 5.20%, vegetables by 2.04%, and fruits by 15.52%, he said, quoting data from the Department of Agricultural Marketing (DAM).
Dr Wasel said the average expenditure of households on rice in Bangladesh is about 21% of total expenditure but the extremely poor households are bound to spend about 32% of their total expenditure on rice only.
As there is no scope to reduce the consumption of rice, poor households reduce the consumption of nutritious foods to tackle the income or price shock, the researcher said, urging the government to extend social safety net initiatives and open market sales operations to ensure price support for the poor amid the ongoing economic predicament.
Dr Wasel said private consumption, also known as consumer expenditure, is about 70% of the GDP in Bangladesh and the understanding, analyzing, simulating, and forecasting of this indicator is one of the prime interests of economists and policymakers, including central bankers.
Rice consumption in rural areas is significantly higher than in urban areas and Per capita consumption of vegetables is also higher in rural areas, he said.
But the per capita consumption of eggs, meat and fruits are higher in urban areas, Dr Wasel said.
The research was conducted by analysing secondary data from the Household Income Expenditure Survey (HIES) of the Bangladesh Bureau of Statistics (BBS) conducted in 2016.
The research team analysed the consumption pattern of nine food items such as rice, food grains, pulses, fish, eggs, meat, vegetables, fruits, and other foods.
"We have analysed information of about 12,056 households from 46000 households of the 2016 HIES," Dr Wasel said.
We found that a 1% decrease in income reduces the consumption of rice, pulses, eggs, and vegetables by less than 1%, but reduces the consumption of fish, meat and fruits by more than 1%, he said.
Similarly, a 1% increase in price level pushes to reduce rice consumption by 0.25% but the rate of reduction is higher for fruits, meat, pulses and other food items, the econometrician said.
Dr Binayak Sen, director general of BIDS who chaired the event, said the cost of living rose tremendously due to the adverse impact of the Russia-Ukraine war prior to recovering from the impact of Covid-19.
Economists and experts present at the event urged the government to provide sufficient support for the poor to cope with the price shock of essential goods.