The poor and low-income people have been going through immense financial hardships bought about by the recent surge in prices of daily necessary commodities, including rice, lentils, flour, oil and salt.
They are struggling to meet regular expenses and, in most cases, are being compelled to axe some items from the grocery cart, to curtail expenses. They are suffering the most from the recent price hike.
Prices of non-food commodities, including textile products, stationary, house rent, transport costs, are also rising at a similar pace with the food items. The cost of living started to soar last November when the price of diesel was hiked to a significant extent.
Besides, prices of various commodities, including consumer goods, industrial raw materials and intermediate products, have been rising in the international market since the middle of last year. The Ukraine war, which began last February, further impacted the market.
If commodity prices go up, it is officially assessed in the form of inflation by the Bangladesh Bureau of Statistics (BBS). It says that the country has witnessed a steady inflation of over 6 per cent in the last three months. The highest inflation of 6.29 per cent was recorded in the previous month when people suffered the most from the high price of essentials. But the official figures show that the inflation rate has subsided in food items during the period.
Almost all the nations, irrespective of the size of the economy, are now facing inflation due to the recovery process from the Covid-shock and subsequent Ukraine war. Keeping the inflation under control has now been the biggest challenge all across the world. The official data show that the inflation rate in Bangladesh is low in comparison to neighbouring India, Pakistan, Nepal and Sri Lanka.
Like Bangladesh, these countries also import different items, including consumer products, from the international market. This has prompted the economists to raise suspicion about the low inflation rate of Bangladesh.
Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told Prothom Alo, “The BBS inflation data is an outcome of average calculation at the national level. The effect of inflation is not 6 per cent for all; rather its impact is much greater on the poor. The common people are in misery.”
To give an example, the economist said the BBS considers 422 products for assessing inflation rate. Some 224 of the products witnessed over 6 per cent rise in their prices in March. Of these products, betel leaf price jumped the most, taking its inflation rate to 178 per cent. Other 173 products registered an inflation of below 6 per cent.
The scenario implies that the inflation has diversified and comparatively more items are seeing price rise now, which is eventually putting a greater impact on daily life.
Market situation
Bilkis Begum, the lone earning member of a four-member family in the capital’s Begunbari area, earns her living by ferrying betel leaves in the city. In conversation with Prothom Alo, she disclosed her ordeal, saying that the recent spell of price hike inflicted immense hardships on them. They were living hand to mouth, but it too became difficult nowadays.
Earlier, she could assume what can be bought and what not before going to market. But the scenario has completely changed now as she finds many items pricier after reaching the market.
Prices of essentials have been on a steady rise for the last several months. According to the trading corporation of Bangladesh (TCB) data, flour, wheat flour, edible oil, pulse, egg, potato,onions, garlic, ginger, dried chilli, sugar and salt have witnessed a significant rise in price.
But during visits to the kitchen markets, prices of rice, wheat, detergent, toothpaste, powdered milk, liquid milk, bakery products, noodles and pasta were found to have soared, though the TCB price-rise chart does not include these items.
According to TCB, the rate of price hike in the last one month ranged from 1 per cent to 100 per cent. Garlic saw around 100 per cent rise in its price while onion price also witnessed a big jump. The imported onion price rose by 64 per cent from Tk 30 per kg to Tk 45/50 per kg within a week. White wheat flour (maida) and brown wheat flour (atta) registered respectively a 30 per cent and 19 per cent rise in their prices during the period.
The price of different varieties of lentils went up by Tk 10/15 at the retail market while that of eggs rose by Tk 5/7 per hali (four pieces). Besides, the price of potato soared by Tk 5 per kg and ginger, sugar and salt jumped Tk 5 to Tk 10.
Despite being the peak season of rice, its price increased by Tk 2/3 per kg at the retail market while the fine rice rose by Tk 1 to Tk 5. Jashim Uddin, proprietor of Ismail Rice and Sons of Karwan Bazar, said a 50-kg sack of rice, which was selling at Tk 2,950 just two days back, is now priced at Tk 3,100. The price will be a bit higher at the retail shops.
Inflation comes down in food items!
According to the BBS, the inflation reached a 1.5-year high this April. The rate was 6.44 per cent in October, 2020. Though prices of most consumer products rose in April, the BBS claimed that inflation in food commodities subsided to 6.24 per cent in April, from 6.34 per cent of the previous month. However, inflation in non-food products was 6.39 per cent in April, which is higher than that in food items.
The overall inflation has been above 6 percent for the last three consecutive months. Bangladesh encountered no such situation in the previous five years. The lowest inflation of the year was recorded at 5.86 per cent in January and it has been on a steady uptick since then.
High inflation in neighboring countries
Bangladesh has apparently been performing better in terms of inflation comparing to its South Asian peers. The overall inflation of India stood at 7.78 per cent in April. The country takes wholesale prices, energy, manufactures, and various sub-sectors into account when assessing the inflation rate.
India recorded an inflation of 8.35per cent in food items while 15.08 per cent in wholesale level, 38.6 per cent in energy, and 10.85 per cent in manufactures. Sri Lanka, which is now in a throe of economic crisis, experienced the worst inflation as its overall inflation rate peaked at 29.8 per cent in April. Apart from that, Pakistan registered a 13.4 per cent inflation and Nepal 7.28 per cent.
International market scenario
Prices of essentials and industrial raw materials started soaring at a time when the economies all over the world initiated the recovery process from the Covid-19 shocks. The Russia-Ukraine war made the international commodity market more pungent in February and it continued turning for the worse since then.
Bangladesh is purchasing goods and raw materials from the international market at higher prices, which pushed up the import cost. The import spending increased further due to the rising price of dollar.
The price of crude oil in the international market almost doubled in the last one year. A barrel of crude oil, which was $60 a year ago, is now selling at $105 to $110. A ton of soybean oil could have been imported at $1200 to $1300 a year ago, but it now costs $1860.
The demand for wheat, the second largest food grain in Bangladesh, is now 7.5 million tonnes per annum. Some 85 cent of the total demand is met through imports. But the Ukraine crisis and India’s ban on exports created turmoil in the international wheat market and pushed the price up to $430 per ton. The price doubled within a year. The import cost of scrap iron and abandoned ships also doubled in a year. Each ton of scrap iron, which was $480 in May, 2021, is now selling at $580 in the international market.
Economist Zahid Hussain said controlling global inflation has now emerged as a big challenge. There is not much to do in case of price hike in the global market. The currency exchange rate can be adjusted if there is ample reserve. It will minimise the inflation pressure. Steps should be taken through time-befitting monetary policy as well as budget in order to mitigate the pressure of inflation.