Import cost of essential commodities including sugar, edible oil and rice has increased as the exchange rate of dollar has shot up.
The price of sugar is now less in the international market than the price in May. However, the price of sugar is Tk 12 to Tk 15 higher in the local market currently than the month of May.
The commerce ministry on Thursday nodded to increase price of sugar by Tk 6 per kg.
According to the ministry and business sources, the price of dollar has played a role in increasing the price of sugar this time. Bangladesh Trade and Tariff Commission (BTTC) has fixed dollar price at Tk 105. In the previous phase, the price was fixed at Tk 95.
The price of dollar started rising in the country from May and the price was Tk 87 at the time. The price has now increased to Tk 106.
It has been found that price of soybean oil rises by Tk 30, palm oil by Tk 20 per litre, lentils (masoor dal) by Tk 18, rice by Tk 7 and wheat by Tk 8 per kg due to the price hike of dollar.
According to Bangladesh Bank, the price of dollar was not changed till January 2022 since January 2020 and the price was between Tk 85 to 86. The price was stable till April 2022. The price of dollar started rising from May.
Policy Research Institute (PRI) executive director Ahsan H Mansur said depreciation of taka against dollar is not unusual. Problems emerge when there is a significant rise and fall . The task of central bank of any country is to control this quick rise and fall. People concerned said Bangladesh Bank could not carry out this task. When different exporting countries including China, India and Vietnam increased their import capacity by compromising the value of their currency, Bangladesh retained the value of taka.
But when a crisis situation appeared, the price of dollar shoots up unbridled.
Import costs of all commodities increased as the price of dollar increased by 22 per cent in five to six months. The price of commodities is also high in the international market. As a result, the people had to suffer a double blow. Inflation has risen to an 11-year high. However, the statistics of inflation is not being published officially.
When asked about the matter, PRI executive director Ahsan H Mansur said, "It was a great mistake to retain the value of the taka against the dollar. We advised to adjust the value gradually, but the government was not convinced. Afterwards, the price went up all of a sudden."
Extra expenditure of Tk 11.36 billion a month
Import cost of soybean was 1,710 dollars per tonne last month. With the value of dollar at Tk 87, a kg of soybean oil costs Tk 149 while with value of dollar at 106, the cost stands at Tk 181. So the extra price is Tk 33 per kg while Tk 30 per litre.
A bit over 900,000 tonnes of edible oil, wheat, sugar, rice, dal and milk powder were imported last month. The import cost was about 640 million dollars. In a comparative analysis of dollar price between May and September, extra about Tk 11.36 billion has been spent a month.
Traders generally adjust the extra expenditure with the commodities. So the consumers eventually have to pay this extra cost for these six items.
The commerce ministry has only fixed edible oil and sugar. The ministry backtracked from the move to fix the prices of other commodities. As a result, it cannot be known whether the amount of price of these commodities has increased in accordance with the price hike of dollar and commodities in the international market. Moreover, it remains unknown whether additional price is being charged from the consumers, cashing in on the situation.
The commerce ministry fixes the price of edible oil on the basis of import, shipment and other costs every month. The price of soybean was fixed at Tk 178 in October slashing Tk 14 per litre.
The businessmen are still worried as the price of dollar is not yet stable. They are uncertain about what would be price of dollar after the commodities reached the port following opening of Letters of Credit (LC).
Director of the importing firm TK Group, Shafiul Atahar Taslim, said this situation would not be created if the price of dollar was adjusted gradually. It is still uncertain when the dollar price would be stable. Under such a situation, there is an uncertainty as to in which price the liability has to be paid after importing commodities taking the current price of dollar into consideration.
Not only essential commodities
There is a negative impact on all types of commodities due to the dollar price. Prices of soap, toothpaste, tissue and toilet cleaners are increasing. All types of foods including bread, baby food are increasing. Educational materials including paper, pens and pencils are on the rise. The price of poultry, fish and cattle feed has also increased.
Price of construction materials rod and cement has also increased. Extra money is being spent to import raw materials.
Speaking to Prothom Alo, Premier Cement managing director Amirul Haque said alongside general consumers, the businessmen have to pay due to high price of dollars. After selling products, it is found that the price of dollar has increased while paying the liability.
Revenue income of government has increased
Except three types of lentils and wheat, duty tax is to be paid to import essential commodities. Chattogram customs fixed exchange rate of dollar at Tk 86.24 in May.
The exchange rate was estimated at Tk 94.73 in September. The revenue income of the government has increased due to price hike of dollars.
According to National Board of Revenue (NBR), collection of import duty has increased by 34 per cent, VAT at the import level by 22 per cent and supplementary duty by 38 per cent in the fiscal year of 2022-23. On the contrary, VAT against selling products at the local market decreased by 19 per cent, supplementary duty by 28 per cent and turnover tax by 44 per cent.
About the development of revenue collection, Ahsan H Mansur said this means the production and transaction in the local market have decreased. Demand has decreased in the economy. This is not good. As a result, the investment and employment will decrease.
He said it is now necessary to control inflation and stability of the dollar. For this, interest rates of banks have to be increased, he added.
*This report, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.