Khichuri index

Posted in economics, labour, macro by jrahman on December 24, 2015

A staple of political rhetoric in Bangladesh is to ensure affordability of rice, lentil, oil and salt.  Throw in a kilogram of coarse rice, 250 grams of red lentil, 40 ml soya bean oil and 10 mg salt and we get a rather bland plate of khichuri.  CEIC Asia database provides monthly retail prices of these essentials in Dhaka with a lag.  Currently, the latest data point is August 2014.  Still, using the bland recipe and prices (and smoothing the data by taking a 12-month moving average), we can get a sense of how the price of our plate of khichuri has evolved over time — for example, when BNP was turfed out in January 2007, such a plate cost around 35 taka, which rose to around 60 taka when the Awami League returned to power in January 2009, and was around 70 taka when its five year term expired.

Of course, to say anything sensible about prices, we need to have a sense of income.  From the same source, we can get daily wage of a skilled factory worker.  Her wages went from around130 taka a day in January 2007 to over 210 taka two years later to over 300 taka further five years on.

Putting the two together, we can get what I am going to call the Khichuri Index — plates of khichuri an average industrial worker can buy in Dhaka.  The chart below shows how the index has evolved between January 2000 and August 2014 (the period I have data for).


We can see a few clear trends in the data.  In the first few years of the last decade, the index steadily rose — wages rose faster than prices, these were good times for Dhaka’s working class.  But the middle of the 2000s were not — even as wages continued to rise, prices rose even faster.  Then, from late 2008, prices fell for a while and the index rebounded.  In this decade, so far, the index has wobbled around a bit — there has been periods of price hikes, but these have been followed by wages catching up or prices declining.

Of course, one can’t just eat khichuri, one has to live somewhere too. I don’t have a series on rents in Dhaka slums, but I’d hazard a guess that it has moved up quite a bit over time.  Also, our factory worker needs to send her children to school, and possibly send money to the villages and so on.  Further, factory workers aren’t the only people who live in Dhaka — we would want to know what’s been happening to the income of the middle classes who work in various services.

That is, we should not treat this stylised index as a substitute for official statistics.

But this stylised index has the virtue of being simple and intuitive to people without formal economics training (that is, most normal people).  And oh, we can also draw some political implications too.  We have discussed in the past why the country’s establishment has made its political choice.  This picture might give you a clue about why the urban working classes might be happy to vote for a change, but see no reason to risk their precious little to demand a vote.













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