44.7pc believe interim govt struggling to control prices: VOA survey

A survey carried out by Voice of America (VOA) revealed that the majority of citizens believe that the interim government of Bangladesh is either faring worse than the previous Awami League government in keeping inflation under control or that the situation remains the same.

The survey showed that 44.7 per cent of the respondents believe that the interim government has done worse than the last Awami League government in reducing the prices of daily essentials like rice, fish, vegetables, eggs, meat, and oil.

Meanwhile, less than one-fourth of the respondents (23.8 per cent) believe that the current interim government is doing better than the previous government. About one-third of the respondents (30.8 per cent) believe that the situation remains the same as before.

In the survey, 1,000 respondents were asked to compare the term of the interim government with the rule of former Prime Minister Sheikh Hasina’s government. The survey showed a slight difference between male and female respondents regarding inflation.

As many as 31.3 per cent of the male respondents believe that the interim government is doing better than the past government in controlling inflation. Meanwhile, among the female respondents, only 16.3 per cent believe the interim government is doing better than the Awami League government.

A large portion of women, 41.2 per cent believe that the situation remains the same as before whereas, only 20.3 per cent of the men share this belief.

The 1,000 respondents were selected for the survey. There was equal number of male and female respondents. As much as 92.7 per cent of the respondents were Muslim. Slightly more than 50 per cent of the respondents were aged below 34 years and one-fourth of them all were city dwellers.

A resident of Mirpur area, Hiren Pandit works as a programme coordinator at a non-government organisation in Dhaka. His family of four, including two children who are university students, was running quite smoothly. But 2024 has brought immense financial pressure to his life.

Hiren Pandit told Voice of America, “We are in a suffocating situation due to the price hike of daily essentials. House rent has gone up and the prices of commodities have increased as well. The same thing which could be bought for Tk 140 earlier, costs Tk 170 now.”

According to Bangladesh Bank statistics, the inflation rate was 9.72 per cent in June this year. This rate increased to 10.87 per cent in October. In the meantime, there has been a mass revolution and a change of government in the country.

The inflation didn’t suddenly pop up in July of 2024 because of the political instability. However, in July the inflation rate was the highest at 11.66 per cent in the year.

The central bank statistics show that inflation in Bangladesh had been fluctuating between five and six per cent in 2020 and 2021. However, the inflation rate started increasing since mid-2022. In 2023, it had gone above nine per cent to reaching ten per cent almost.

Economists are saying that the global fuel market became unstable after Russia started invading Ukraine in February of 2022. The price of fuel oil surpassed USD 100 per barrel. This came as a huge blow to import-dependent Bangladesh.

Bangladesh’s import cost went up. The price of taka was depreciated against dollar and the foreign reserve kept decreasing. And, the country’s capability of import started declining.

The upward pressure on the prices of daily essentials continued after the interim government took charge last August. Though the inflation rate reduced a bit in September, it increased again and reached nearly 11 per cent in October

Economists say that the political and natural incidents have had an impact.

Research director at Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem said that the movement in July-August and the fall of the government in context of that has disrupted the supply chain in Bangladesh.

It has impacted the global supply system as well. So, an internal shortage has been created. At the same time, there were two consecutive spells of flood affecting a large area of the country. As a result, a pressure has been created on the production of rice, especially Aman rice and on the production of other vegetables as well.

Golam Moazzem believes, probably there has been a negative impact on employment and income in the informal sector and the service sector of the country after the fall of Awami League government on last 5 August. As a result, it has had a negative impact on people who have comparatively less work and those survive on daily wages.

After the new interim government came to power, they took quite a few steps in order to reduce the inflation. For instance, the import duties on daily essentials like rice, potato, sugar, oil and onion have been reduced.

The margin for opening letter of credit (LCs) on the import of various goods has been reduced from the margin of 100, so that the importers can import easily. At the same time, the market is being monitored. And, those playing major roles in the supply chain are being kept under observation as well.

Golam Moazzem said while the statistics of the interim government is more transparent and acceptable than before, there’s no innovation in the measures taken by the administration.  

Golam Moazzem said, “These initiatives are just like those initiatives from before. I’m not seeing much innovation. I am really disappointed. For, I have not seen any dynamic initiative for the management of inflation and supply chain so far.”

This blow of the inflation is having a terrible impact on people with limited income. Hiren Pandit said that earlier about 60 to 65 per cent of his monthly income used to be spent on house rent and food. Now he has to spend 85 to 90 per cent of his salary for that.

“Everything I’m earning is being spent. I’m unable to save anything now. Life has become almost unbearable for us.”

When there’s no change in the family income with the price hike of goods in the market, low or mid income families are forced to exclude luxury items or even essential items from the household. In this case, Hiren Pandit is no exception either.

He said, “Earlier we used to eat fruits sometime, which has been stopped now. We could afford to eat mutton once or twice a month but that too had to be cut down.”

The Bangladesh Bank has been increasing the bank rate in phases since 2022, so that inflation can be kept under control by cutting down on demand. At the end of October the bank interest rate has been increased yet another time to raise it to ten per cent.

Though these measures are showing any results yet, Golam Moazzem is considering them to be positive. However, he believes that some of the issues will continue until some basic reforms are carried out in the supply chain management of agricultural items.

Golam Moazzem said, “A sort of oligopoly seems to be prevailing in the market structure of Bangladesh, where there are only a few suppliers and the whole market is under their control. So, it’s them deciding what will be the rate for raw materials and to whom will they distribute it at which price.”

According to Golam Moazzem, the agricultural market in Bangladesh is highly sensitive and political. For, the supply flow in markets can put the government under political pressure.

That’s why the government tends to take some swift measures and show some quick results. However, there’s less possibility of seeing results from carrying out reforms in this market out of political motivation.

A notable proposal for market reform is to ‘target’ five or six products for a period of three years and take initiative of fixing the supply chain management.

Golam Moazzem said, “If these are regularised and formalised, for example nobody except the registered agents can enter the market and the transactions are digitalised so that everything can be monitored, we will see results in this case. But we’ll have to wait for these results.”