The middle-class people have embarked upon a new fight for survival. The rise in the price of octane, petrol, diesel and kerosene has become a big concern for the poor and people with limited earnings. The middle-class people are also quite concerned about this. The highest ever hike in the price of fuel oil in the history of Bangladesh has somewhat shocked everyone. It is almost certain that there will be another round of hike in the price of commodities. Apart from rice, lentils, edible oil and salt, prices of non-food products and services, including transport cost, clothes, pen and papers, will increase. People will have to maintain austerity to cope with the additional expenses unless there is a raise in their income.
The rise in the price of fuel oil will increase people’s expenditure in every phase. Thousands of families living a little above the poverty line are at risk of being poor again due the inconsistent and uncontrolled expenses as compared to their income.
Speaking regarding this to Prothom Alo, former chief economist of the World Bank’s Dhaka office Zahid Hossain said, “Price hike stemmed from a rise in the price of fuel oil is only a matter of annoyance for the rich. But for the poor and limited income people, it creates a crisis of livelihood. The middle-class people will suffer the most this time. The cost will increase in every sector, including agriculture, industries and trade. I don’t know whether its impact will be reflected in the inflation data or in the account of Bangladesh Bureau of Statistics (BBS). However, people will feel it whenever they go to the market as information on price hikes cannot be covered up.”
Middle-class people’s fight for survival starts
Kabir Hossain works at the Dohar branch of the One Bank. He lives with his wife and children in the capital’s Mohammadpur. He commutes to his office on a motorcycle from his home in Mohammadpur. He has to travel around 70 kilometres daily for the office. He needs two litres of octane daily which costs Tk 180 per day. However, he will have to bear an additional Tk 92 for the same distance from now on.
Kabir Hossain updated a status on his Facebook account on Sunday at around 2:30pm. He wanted to share rides on his way to Dohar to cope up with the additional expenses on fuel. He also gave his contact number.
Speaking to Prothom Alo, he said, “There has been no pay-raise in the last 10 years except for the five per cent yearly increment. It’s not possible to cover all the family expenses, including food, children’s study and transport costs, with this little increment anymore.”
“Apart from the transport cost, the rise in the price of fuel oil will result in an increase in the prices of commodities. It will increase the overall family expenses. I don’t know how to tackle this,” he said.
People like Kabir Hossain with limited income are going to suffer even more. According to a World Bank report on poverty, some 55 per cent people face the risk of being poor again every time prices of commodities rise.
Families living a little above the poverty line may become poor again due to a sudden economic recession or a price hike. According to the BBS census, the current population of the country is 165.1 million. As such, more than 90 million people may face the risk of being poor again at any time.
Transport sector hit first
A rise in fuel oil price immediately impacts the transport sector resulting in the rise of fares. The carrying cost for goods also increase. Already the government has decided to increase bus fare by highest 22 per cent.
According to the sources of Freight Forwarders’ Association, the fare of freight trucks and trawlers may increase up to 40 per cent in Dhaka-Chattogram port route. The fare of a five-ton truck on this route is Tk 17,000 to 18,000 at the moment. It may increase up to Tk 25,000. The fares for 30-feet and 40-feet trawlers are Tk 30,000 to 31,000 and Tk 36,000 to 37,000 respectively. It will also increase in the same way. As a result, the cost of the importers and exporters will go up.
Several agricultural products, including rice and vegetables, are transported to Dhaka and its adjacent areas from Bagura, Naogaon and Pabna area. The truck fare on these routes will increase to Tk 24,000 to Tk 25,000 from Tk 18,000 to Tk 19,000, said Adam Ali, a vegetable trader from Bogura.
Price of consumer products to increase
The production and transport costs of several consumer products, including rice, lentil and vegetables will increase as a result of the hike in the price of fuel oil. People will have to buy commodities from the market at an extra price. It is the season of Aman harvesting. However, the farmers are forced to rely on diesel for generators to run the pumps due to the government-announced power cuts, which have already increased the use of diesel. But, the farmers will have to bear an additional cost of Tk 34 to buy a litre of diesel. As a result, the production cost will increase. In addition to this, they will have to bear an extra cost for truck fare to transport the rice they produce. And like rice, the price of all the other daily commodities, including vegetables and onions, will go up in the same way.
Apparel, soaps and oil will also bear the brunt
The prices of non-food products like clothes, oil, soap, shampoo, toothpaste, pen and papers, have been on the rise over the last few months. The hike in the price of fuel will further increase the price of the commodities. The transport cost will rise at first. Besides, small and big industries run diesel-powered generators. Use of these generators has been increased recently due to load shedding. Now as the price of diesel has increased, so will the cost. Besides, the price of manufactured products will increase because of the additional production and transport costs.
Where will inflation be stopped?
The inflation rate has increased gradually to 7.56 per cent over the last few months, which is the highest in the last nine years. However, it decreased to 7.48 per cent in July. The rise in the price of diesel and kerosene was one of the main reasons behind the inflation.
There has been a pressure on our economy for the last two or three months. A big deficit in the balance of transaction has emerged. The government has sought a loan of $ 4.5 billion from the International Monetary Fund (IMF). The discussion between the two parties regarding the loan is about to begin. However, the IMF has always been stressing on adjusting the price of fuel oil instead of subsidising the energy sector.
Earlier, the government had taken a loan of $ 1 billion under the Extended Credit Facility (ECF) from the IMF. Later, the price of fuel has been increased several times as per the condition of the IMF. The inflation rate reached double digits at the time.
Zahid Hossain, former chief economist of World Bank’s Dhaka office, said, “People at threshold start going below the poverty line if the inflation rate reaches eight to nine per cent. People’s income has not increased that much in the last two years due to coronavirus; rather it has decreased in many cases. In such a situation, the inflation rate will make a big jump as a result of increasing fuel oil prices. My assessment, the rise of kerosene price alone will increase the inflation rate by 0.8 per cent."