Irrational price hike as no one speaks for consumers

Khondaker Golam Moazzem

The government does not have any monitoring or supervision over the market and the supply system of perishable and non-perishable food products. When any sort of influence is brought into to such a market structure, the powerful quarters take advantage of it and use their power to make extra profit.

We currently see such a picture in the case of commodity prices in the market. A type of instability prevails in the context of commodity prices.

Consumers are victims of this instability. There is no powerful quarter in the market structure and the supply system to speak in their favour. Simply put, there is no one to speak for the consumers. So, they have been destined to accept the pressure of additional prices.

If we turn to our market structure, we see that the price of goods is determined by the influence of either producers, or the middlemen. Hence, the commodity prices sometimes increase unreasonably despite no significant gap between the demand and the supply. So, the quarters are increasing the commodity prices in proportionate with their influence on the market structure.

Analysing the situation of the past few years, it is seen that there have been three phases of instability in the market. The first phase took place during the Covid-19 pandemic when a supply shortage surfaced against the market demand. Then the commodity prices were hiked unreasonably, taking the advantage of supply shortage.

Later, the prices jumped again after the commencement of the Russia-Ukraine war. Now, the prices are being hiked, citing the rise in fuel prices as the reason. It is true that the transportation costs increased due to the rise in fuel prices.

Fuel oil is a product which, if its price is hiked, pushes up all types of costs, in addition to transport costs. Its impact then goes beyond the consumer class and affects all. Many types of additional expenses put pressure on commodity prices.

However, the current difference in wholesale and retail prices can be explained by no formula or logic. The prices are rising at a higher rate than the reasonable ceiling. Moreover, there is no quarter right now to be vocal for the consumers.

In such a situation, the government has many things to do, if they really want to protect the consumer. What the government can do in this case is making arrangements to inform the consumers regularly about the rate of rational price increase.

A statistics needs to be presented before the consumers on how much the commodity prices may jump rationally due to increase in fuel price and subsequent hike in transportation and other expenses. The consumers will be aware and at the same time those who play a role in increasing the price will be cautious.

***The author is the research director of the Centre for Policy Dialogue (CPD).