The immediate impact of increased prices of octane, petrol, and diesel has begun to be felt in the transport sector. The process of raising truck fares for transporting goods to the capital from different parts of the country has already started. In some places, fares have already been increased, while in others, negotiations are ongoing.
As a result, prices of essential commodities in the market may rise, ultimately affecting ordinary people and pushing the cost of living even higher.
The price of diesel has been increased from Tk 100 to Tk 115 per litre, kerosene from Tk 112 to Tk 130, octane from Tk 120 to Tk 140, and petrol from Tk 116 to Tk 135. The new prices came into effect from Sunday.
Liquefied petroleum gas (LPG) prices were also raised yesterday. The price per kilogram has increased by Tk 17.62. The widely used 12-kg LPG cylinder now costs Tk 1,940, up from Tk 1,728—an increase of Tk 212. This marks the second price hike this month.
Primarily, the domestic fuel price adjustment was driven by rising oil prices in the international market due to conflict in the Middle East, along with indirect conditions from the International Monetary Fund (IMF).
Speaking to journalists at his office yesterday, Finance Minister Amir Khasru Mahmud Chowdhury said in response to a question about inflation, “Inflation may rise, or it may not. The increase in fuel prices is not significant, and fuel accounts for only a small portion of the inflation basket.”
Transport fares begin to rise
The Dhaka–Chattogram route is one of the country’s main corridors for transporting goods. From Chattogram Port, as well as the country’s largest wholesale market, Khatunganj, goods are distributed nationwide.
It has been learned that due to a recent fuel shortage, transport costs on the Dhaka–Chattogram route had already increased by an average of Tk 10,000 per truck. With the new fuel prices taking effect from yesterday, costs are expected to rise further, said Anil Chandra Pal, executive vice-president of the Inter-District Goods Transport Association of Truck and Covered Van Owners.
Speaking to Prothom Alo last night, Anil Chandra said that under normal conditions, truck fares on the Dhaka–Chattogram route used to range from Tk 18,000 to Tk 20,000. However, due to the ongoing crisis, fares had risen to Tk 28,000–30,000.
He added, “We have been informed that diesel will be available from Sunday. Following this, fares have come down to around Tk 20,000–22,000. However, the final transport cost will depend on fuel availability.”
Rice is distributed across the country from the Khajanagar hub in Kushtia. Until recently, truck fares from Khajanagar to Dhaka, Munshiganj, and Manikganj were Tk 18,000–20,000. Up until Saturday, rice was transported to the capital at these rates. From yesterday, the fare per truck has been increased by Tk 1,500.
Zainal Abedin, general secretary of the Kushtia Rice Mill Owners’ Association, told Prothom Alo that the rise in diesel prices has increased truck fares, which will naturally push up wholesale rice prices.
Mahasthan Hat in Bogura is one of the country’s largest wholesale vegetable markets, from where shipments are sent across the country, including to the capital. The fare for a 5-tonne truck from Bogura to Dhaka used to be Tk 16,000–18,000. Yesterday, an additional Tk 2,000–3,000 was demanded. The increased fares are expected to take effect from Monday.
Mustafizur Rahman, a vegetable wholesaler at Mahasthan Hat, said on Sunday evening that transport costs had not yet increased following the diesel price hike, but the new rates would be implemented from Monday.
Truck owner Ujjwal Sheikh from Bogura said that although fuel price hikes have increased transport costs, no one is yet willing to pay the higher fares. “When we ask for increased fares, clients are refusing to transport goods,” he said.
Meanwhile, although no decision has yet been taken to raise bus fares for passenger transport, the process has begun. However, the Bangladesh Inland Water Transport Authority (BIWTA) has received a proposal to increase launch fares by 42 per cent from the Bangladesh Inland Water Transport Corporation.
Second-round price increase in goods
Fuel price hikes first increase transportation costs, followed by increases in production and retail prices in the second phase.
Here is how prices rise: even if transportation costs increase by 10 per cent from the production point to the market, that cost is added to the final price. If production costs rise beforehand, those are already incorporated into the product price before it reaches the market.
An example of rising production costs can be seen with the upcoming Aman rice season. If load-shedding continues, irrigation pumps will need to run on diesel-powered generators. Farmers will now have to pay an additional Tk 15 per litre of diesel, raising production costs. This will eventually be reflected in market prices. Furthermore, transporting that rice across the country will involve higher truck fares.
Vegetable prices rising
Not only rice, but prices of vegetables, potatoes, onions, and other daily essentials may also rise at a similar rate. A visit to Karwan Bazar yesterday afternoon showed that prices of some vegetables, including pointed gourd, cucumber, and papaya, had already started to increase by Tk 10–15 per kilogram.
Shawkat Khan, a vegetable trader at Karwan Bazar, told Prothom Alo that no new shipments had yet arrived after the fuel price hike. “Vegetables will arrive early Monday morning. If higher truck fares are charged for those shipments, vegetable prices in the market will increase,” he said. He added that higher transport costs would also push up prices of rice, lentils, onions, garlic, and other essentials.
For over a year, prices of non-food items such as clothing, oil, soap, shampoo, toothpaste, and stationery have remained elevated. The increase in fuel prices is expected to further drive up the prices of these goods, as higher costs of raw materials, production, and transportation will be passed on to consumers.
In addition, diesel-powered generators are widely used in garment factories and other industries. With increasing load-shedding, reliance on generators is expected to grow.
Rising prices of goods will further fuel inflation, which has already remained high for more than three years. In August 2022, fuel prices were raised by more than 40 per cent in a single move, pushing inflation from around 7.5 per cent to 9.5 per cent that month. Since then, inflation has not returned to a tolerable level.
AHM Shafiquzzaman, president of the Consumers Association of Bangladesh (CAB), told Prothom Alo that price increases across all goods are inevitable.
“When fuel prices rise, costs increase at every step of life—transportation, production—everything. As a result, not only low-income and middle-class groups, but people of all income levels will face another round of rising living costs,” he said adding that ensuring a stable fuel supply is now the government’s biggest challenge.