The poor experience higher rates of inflation than the rich and bear the full brunt of the scourge as they spend the lion's share of their incomes on food and have little money left for other needs. Soaring food prices affect the poor people's welfare seriously, said a Bangladesh Bank research paper, stressing the need for a pro-poor monetary policy and comprehensive strategies for boosting farm outputs, creating jobs and widening social safety-net schemes. In November last year, food price inflation went up to 19.51 per cent for hardcore poor, 17.07 per cent for absolute poor, 14.95 per cent for middle income group while it was 13.09 per cent for rich people, the authors of the paper calculated. Poor people bear the full brunt of food inflation as they have to buy the same amount of food at a higher price and find no way to reduce their food consumption or a cheaper substitute for the staple. Rising food prices also reduce their real income and leave them with a little money for other purposes including education, health, fuel and energy, the paper said, detailing the negative impacts on the welfare of the poor. The hardcore and absolute poor spend over two-thirds of their income on food items whereas rich category people spend 41 per cent of income on foods, the paper said. A unit change in food prices does not have the same effect on the poor and the rich, the research paper explained. Food prices shared 67 per cent of rising inflation in 2007 while it was 62 per cent in 2006, it added. Non-food inflation adds more to the general inflation in the rural areas than in towns, it pointed out. Non-food inflation remains lower at the point of origin, but higher transportation costs, inadequate infrastructure, imperfect market organisation and other factors contribute significantly to the overall inflation in the country, the paper said. In this backdrop, the government and Bangladesh Bank should take appropriate measures for formulating anti-inflation policies, it suggested. The government should create more employment opportunities especially for the poor and expand social safety net to protect the vulnerable group. An appropriate policy response needed to increase production of food items including rice, sugar, edible oil and vegetables, the paper suggested. The government must ensure credit, fertiliser, quality seed, diesel and electricity for the farmers for higher food production as well as necessary supports for non-farm production. It should also take necessary measures to increase social sector spending and ensure poor people's greater access to health and education at low costs to protect them from long-term shocks of inflation. Bangladesh is a net food importing country and higher price in the international market may have adverse impacts on net trade balance and foreign reserve, the paper cautioned. In this backdrop, the Bangladesh Bank should follow pro-poor monetary policy through minimising depreciation of domestic currency and find a better inflation mechanism to prevent prices from spiralling further.