Inflation increase feared due to unrest and uncertainty

The common people were already floundering under the high inflation rate for the past two years. The people feel this pressure in the market every day. Various initiatives of the government have also failed to relieve the pressure of inflation. The prices of rice, lentils, onions, garlic, sugar, vegetables, fish and meat are hardly affordable by the low and fixed income group.

Under these circumstance the ongoing uncertainties have created newer crises regarding high inflation in the economy, believe economists. The poor people have fallen in trouble afresh from the price of commodities going up.  Since the internet is down about 10 million (one crore) families with TCB cards have not been receiving daily commodities at subsidised prices over the last couple of days.

The supply chain of daily essentials in the country had almost collapsed due to the violence over the past couple of days. The prices of commodities started rising in the markets of the capital. The government took initiative to bring the situation under control by imposing curfew. However the supply chain of commodities between the capital and the whole country only started becoming active again over the last two days.

Supply of commodities in the markets of the capital has increased and the prices have also started coming down a bit. However, it still hasn’t returned back to the situation from two weeks back yet. Controlling the high inflation rate is indeed a major challenge for the government. The price hike of commodities or the high inflation rate directly impacts the common public. And, the cost of running their households goes up.

Speaking on this topic, executive director of South Asian Network on Economic Modeling (SANEM), Selim Raihan told Prothom Alo that the public is under the pressure of high inflation for about two years. But, the low and limited income population has fallen under unnatural pressure because of the recent violent incidents. Nobody was prepared for this situation.

On one hand the low income population is left without work as almost everything is closed, on the other hand the prices of commodities in the markets are mounting. The working class people don't even have the savings to survive two to three days. So, the growing prices of commodities have increased the ongoing new crisis of high inflation even further, he added.

The people have been under the most pressure of inflation for one year over the last 12 years. The income of people is not increasing in line with the rate inflation is increasing. The pace of expenditure being higher than the income has caused trouble for the low income population.

According to latest data from Bangladesh Bureau of Statistics (BBS) the average inflation rate in the recently over 2023-24 fiscal was 9.72 per cent, which is the highest among the last 12 years as per the fiscal-based records. The overall inflation did not drop below 9 per cent in any month of the whole year. Meanwhile, the national wage rate has experienced an increase of roughly 7.5 per cent.

food inflation had already been in a bad shape for the last one year. This had been above 10 per cent in as many as seven out of the last 12 months. The food inflation had risen to 12.54 per cent in August last year, which was the highest in that fiscal.

While the target was to retain the inflation rate within 6 per cent in the last fiscal, it’s nowhere near that actually.

The supply of daily commodities to the capital from different parts of the country had almost closed because of the clashes that erupted in the last couple of days. So, the prices of various items including rice, broiler chicken, chicken eggs, fish, meat, green chillis, onions and potatoes increased considerably in the market. However, the prices of vegetables have relaxed a bit in the last two days. The retail sellers and the buyers are saying that the market is still heated and the prices have not come down to the previous levels yet.

Visiting Mohammadpur Town Hall, Krishi Market, Shewrapara and Karwan Bazar kitchen markets in the capital on Tuesday it was found that the prices of various rice varieties have increased by Tk 2 to 5 per kg. For example, a kilogram of coarse rice (paijam) was selling for Tk 54 at Mohammdpur Krishi Market on the retail level. The same rice was sold for Tk 50-51 two weeks back.

Traders from Mohammadpur Krishi Market, the largest wholesale depot of rice in the capital said that no rice trucks have arrived there since Friday till Tuesday because of the uncertainties caused from the clashes. However, the price remains stable there as rice had been stored on the wholesale level. Seller of the Bengal Rice Agency in Krishi Market, Md Nazim Uddin hopes the price of rice will come down in the retail market when the supply increases.   

Except for rice the prices of other daily commodities like sugar, onion, broiler chicken and chicken egg have increased a little. Sugar sold for Tk 135-140 per kg in the markets of Dhaka on Tuesday. Just two days ago, the price of sugar was Tk 5-10 less on a kg. Local verities of onion are selling for Tk 110-120 per kg in the market now. While the import from India has increased, there’s no news of the price coming down yet.

Broiler chicken is selling for Tk 190 per kg now, which cost Tk 170 two weeks back. The price of browns egg from farm chickens has also increased by Tk 10-20 per dozen and are selling for Tk 150-160 now.

The supply of vegetables to Dhaka from different districts of the country has increased in the last two days. So, the price of vegetable has started decreasing. Most of the vegetables are selling below Tk 100 right now. The retail sellers however say that the prices of the vegetables are yet comparatively very high. The prices were supposed to be a lot lower in this peak season.   

Meanwhile, the fish market has been impacted as well. The prices of fish are high as the supply has been low in the past few days. People with a limited income consume rui, tilapia, pangash and shrimp more. The prices of these varieties of fish are Tk 20-40 higher compared to normal times.  

Consumer Association of Bangladesh (CAB) president Golam Rahman said if the supply of commodities is fine, the prices also remain under control. But it cannot be denied that there is high inflation in the country. Common people are in a difficult predicament with the increased prices. So, the government needs to focus on increasing people’s purchasing power as to their income. However, an environment for normal economic activity needs to be created at the earliest by fixing the supply chain that has come to a standstill in the last few days.

After remaining closed due to the clashes in the past few days, the supply of daily commodities to the capital has been increasing gradually from Monday. The state minister for commerce Ahsanul Islam visited the Karwan Bazar and Mohammadpur kitchen markets in the capital in person on Tuesday to explore how much the supply of daily commodities has increased in the markets. At the time he visited the shops and enquired about the price as well as supply of commodities.

Following the market visit, Ahsanul Islam told the journalists that the supply chain has been restored within the fastest time possible even after so much destruction. There’s no shortage of supply for any of the daily commodities in the wholesale market. When these commodities reach the retail markets, the price will logically come down there as well.  

The state minister for commerce also stated that the government is working especially to ensure that there is no obstruction in the supply of perishable commodities like onions and green chillies even during the curfew. So, he hopes that there will be no shortage of supplies.

A few daily commodities including rice, lentils and edible oil are supplied among ten million (one crore) families of the country at susidiesed prices from the Trading Corporation of Bangladesh (TCB). The distributers run the whole operation through a specific app. However, the app cannot be activated as the internet is down. The supply of these products among the beneficiaries has been suspended for the last three to four days. So, many of the TCB card-holding consumers are buying commodities at higher prices from outside markets.  

Commenting on the overall situation, SANEM executive director Selim Raihan told Prothom Alo, “The violent incidents of the past few days turned into a heavy loss for the economy. A sort of fear, uncertainty and insecurity has risen among the public. We are still unable to fix the trade and movement of the commodities. The supply chain of goods needs to be restored by strengthening security. Plus, it’s necessary to introduce special aid interventions for poor families.”

Selim Raihan also stated that the government is failing to bring the ongoing high inflation rate under control for the last two years. There is a lack of coordination between the monetary policy, revenue policy and market management. Concerted efforts on these issues are needed to control the inflation.