Inflation ate up more of real wages in July

• Growth in the WRI compared to higher inflation rate affected the low-income groups

Skyrocketing prices of essential goods kept eating up real wages in Bangladesh amid rising inflation over the last few months, as low-paid workers pressed for pay hikes.

Stymied growth in the wage rate index (WRI) compared to higher inflation rate affected the low-income groups.

Bangladesh Bureau of Statistics (BBS) data show the country's WRI at 6.56 per cent in July.

Conversely, the inflation rate in the first month of the current fiscal year (July) was recorded at 7.48 per cent.

Economists said that if the lower WRI continued against higher inflation, many people would slip down the poverty line and there will be severe impact on employment, thereby on production and consumption.

Over the last few months, the gap between the WRI and point-to-point inflation has been gaping wide, thereby eating into the real wage rates of daily labourers.

The inflation rate crossed the 6 per cent club early this year from the 5 per cent club in 2021.

Inflation suddenly jumped onto a 7 per cent trajectory three months ago in May, which widened further the gap with the WRI.

The BBS data show that the WRI in May this year was 6.38 per cent while the point-to-point inflation swelled to 7.42 per cent, and in June, the wage index increased to 6.47 per cent while inflation far outstripped it to stand at 7.56 per cent.

Before May this year, the gap between WRI and the inflation rates was very thin.

The WRI in April was recorded at 6 per cent while the inflation rate was 6.29 per cent, in March the WRI was 6.15 per cent against inflation at 6.22 per cent and in February the WRI was 6.03 per cent while the inflation was 6.17 per cent, according to the BBS counts.

Nearly 87 per cent of people in Bangladesh's work in informal sectors where most of them are daily wage earners.

WRI is an important indicator for measuring the trend and changes in the aggregate wages of the wage earners.

It is intended to measure the movement of nominal wages of low-paid skilled and unskilled labour over time in different sectors of the economy.

It is also used to measure changes in real wages relative to prices of goods they buy.