There is further worrying news in the global market at a time when the price of edible oil in the local market has hit a decade-high. The price of various daily essentials including rice, sugar, wheat, lentils and milk powder is increasing in the exporting countries. The price of cooking gas and fuel oil also is on an increase.
The industrial product market is also volatile. The price of plastic granules was US$900 a tonne in the global market last July. It nearly doubled at the end of February. As a result, a plastic bucket is likely to cost more in the coming days. Besides, the price of raw materials for iron rods and scrap metal has incased excessively. There is no relief either when it comes to the prices of cement clinker, cotton, fertiliser, animal and chicken feed, wood, aluminum and tin.
Traders claimed that not only the prices of the commodities, but sea freight charges for importing goods also costs more now. They said sea freight rates for carrying containers has increased from 33 to 122 per cent, varying on the country and distance. Extra sea freight charges have resulted in the rise of import costs of various products including motorcycles, cars and agricultural machinery.
According to the Food and Agriculture Organization (FAO), the global food price index stands at 116 point at the end of February after climbing for ninth month in a row. Earlier, the price index reached this higher in 2013. What is the reason for the price hike? The American investment bank JPMorgan Chase revealed this in a report released last month. They said the global economic slump that coronavirus pandemic had created now sees a big possibility of revival as the vaccine has arrived. As a result, the commodity market has also revived. Besides, more liberal policy taken by the big economies on the flow of the money into the market, high inflation and weak dollar price has also caused the rise in the price of goods.
Managing director of the Chattogram-based Seacom Group that runs a business of edible oil, wheat, cement, gas, plastic and cattle feed, Mohammed Amirul Haque, compared the present global market with that of 2008 and 2011. He told Prothom Alo that the price of almost all goods had increased after the last global economic slowdown. This time, a similar apprehension looms large. He said if the prices of daily essentials increase, limited-income people will suffer. There is a risk for traders too. Many exporting companies in Bangladesh incurred loss because of the global financial crisis in 2008 and then they couldn’t survive.
Bangladesh depends on the import of many goods of which prices are rising globally, including edible oil, sugar, wheat, liquefied petroleum gas (LPZ) and raw materials of most of the industries.
If price of goods like sugar rises, people’s daily expenses increase directly. Besides, industrial product prices increase living expenses indirectly. For example, if the price of chicken feed rises, chicken prices increase too. Price of Sonalika chicken has increased from Tk 100 to Tk 300 in the local market in a month. Poultry farmers blame the feed price hike. Again, the price of clothes may increase during Eid-ul-Fitr because of high price of cotton.
In total, the government is a concerned over the situation of the global market. Commerce secretary Md Zafar Uddin told Prothom Alo on Saturday night, “We are monitoring the global market situation. The price of importable goods is on the rise. A meeting will be held with the respective parties on the local market situation of the products related to the ministry at the midmonth.”
Worry centering month of Ramadan
Ramadan will begin by mid-April. People concerned said there is a tendency to increase the price of goods without any reason by taking advantage of excess demand during Ramadan. In addition to this, there might be an attempt to use the global market situation as an excuse.
In the global market, according to the World Bank report, the price of soyabean oil rose from USD821 to USD1,032 from last July to this February while price of sugar increased from USD271 to USD360 and price of wheat from USD213 to USD277.
Sources at Chattogram port said, release of wheat imported from Russia and Ukraine costs USD222 to USD233 per tonne including sea freight costs. The figure increased to USD290 per tonne of wheat imported from Russia. Demand for lentils and chickpeas rises during Ramadan. Importers claimed price of these two legumes increased by more than USD100 a tonne in a gap of four months. They said price of chickpeas has increased to USD630 a tonne and lentil to USD630-680 a tonne.
According to milk price monitoring website Global Dairy Trade, price of milk powder was below USD3000 a tonne last November. It has exceeded USD4,300 in February.
The price of soyabean and palm oil has already increased sharply in local market. Traders proposed rising of Tk 5 more a liter of soyabean oil at a meeting with Bangladesh Trade and Tariff Commission last week. Price of sugar increased by Tk 5 a kg to Tk 65-70 in two months. Traders said price of flour and coarse flour has risen a little too. Though the government reduced rice import duty but price of rice didn’t fall.
The owner of Chattogram’s commodity goods company RM Enterprise, Shahed Ul Alam told Prothom Alo that impact of price hike in international market has fallen on edible oil, sugar and split peas. Though price of wheat has increased in global market but price in local market remains a bit low due to increased import. Price of other goods are stable. However, the global price spike affects local markets, he added.
Extra price of rod and cement
Scrap metal is the main raw material of iron rods. Its price started rising last November. At that time, the price of heavy melting scrap (HMS) was at USD310 a tonne. It rose to USD455 a tonne in February. Price of iron rods has increased by Tk 9-10 thousand to Tk 65-67 thousand a tonne in several phases in local market.
The price of cement had been stable for quite some time. Since the price of its main raw material, clinker, has climbed up, several companies have increased the price of cement by Tk 10 a bag. According to various price monitoring websites and importer sources, price of clinker was at USD38 a tonne globally in July last year. It now exceeded USD50 now.
Volatile fuel market
At present, many families depend on LPG for cooking in the country. The price of LPG has increased by, on average, 38 per cent from last July to this February. Companies also raised the price a bit in the local market. The price of crude oil fell sharply in last April because of coronavirus pandemic. According to the World Bank, global crude oil prices were USD31 a barrel in April last year. It has reached USD62 in February. However, rise in fuel price in the country depends on the government. If global price goes up, the government will have to subsidise in fuel or raise its price.
Sea freight charge hits record high
Bangladesh imports the highest number of goods from China by ship. According to sources at importing and freight companies, carrying a 20-feet container from China’s Shanghai to Chattogram by ship costs up to USD1,780 and it was around $800 before coronavirus pandemic.
Regarding the sudden rise in sea freight charges, businesses say big shipping companies remove ships, being operated on lease, from their fleets because of economic slowdown at the beginning of by coronavirus pandemic. Less number of ships were operated in sea at that time, causing a container crisis. Now demand for container has increased suddenly so the freight charges.
Exporter Faruk Ahmed of Khatunganj told Prothom Alo cost of importing goods from China, India and Dubai to Bangladesh has doubled now. Though price of some products hasn’t increased but rise in sea freight charge causes the price hike.
‘Situation must be monitored’
Price of goods fluctuates in the country’s two largest wholesale markets – Khatunganj in Chattogram and Moulvibazar in Dhaka, based on global market. Wholesale merchants of these two markets conduct transection daily by monitoring the global market situations online. That affects retail markets.
Research director of the non-government think-tank Centre for Policy Dialogue, Golam Moazzem told Prothom Alo that monitoring should ensure that no one can take extra advantage of the volatile situation in the global market. The commerce ministry will have to review the situation of import, supply and stock weekly for now, he added.
Golam Moazzem further said sale of daily essentials will have to be expanded widely after importing it through Trading Corporation of Bangladesh (TCB) for the limited-income people. Other programmes of the government should also continue.
However, traders are also coming up good news. They said the county has witnessed a high yield of boro paddy. New rice will start arriving in the market in May. Besides, there is nothing to worry about during Ramadan since the season of local varieties of onions and garlics has begun. The price of egg plant, cucumber and green chilies will also remain comparatively low, they added.
This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Hasanul Banna