Price hike strikes limited income consumers

The retail price chart of the essential commodities including food products is on an upward trend over the last three months, while consumers and small businesses are still struggling to cope with the pandemic-induced economic slowdown.

A recent market monitoring revealed that the price of rice increased by 29 per cent over the last one year. The price of one kilogram of rice has risen to Tk44-55 from Tk34-40 within the year.

Meanwhile, consumers have to pay 37 per cent extra to buy a litre of soybean oil. The price of soybean oil increased to Tk134-140 from Tk 95-105 in the one year.

Like rice and edible oil, other commodities including wheat, sugar, broiler chicken, beef, powder milk and garlic are now costly for the consumers, particularly the low-income people.

Market related people and consumers observed that the price of essential products increased aggressively in the last three months.

Almost all the business and employment sectors started to shrink since coronavirus hit the country in March last year. Till now, small businesses are struggling to cover the loss they have incurred due to fall in demand.

Although the economy has started to get back on track since the pandemic situation started improving in late 2020, many furloughed employees still are unemployed and small businesses are struggling to cover the loss they had incurred due to fall in demand.

The frustrating stories of the bread earners do not end here.

Although the government has refrained from hiking the price of utility services, consumers are feeling the heat of increased commodity prices. Their worry has been intensifying as the month of Ramadan–the peak season for the businesses to cash extra profit–is approaching.

Abdullah Raquib lives with his wife and son at a rented house in Badda of the capital city. He works for a private company and hasn't received his monthly salary of Tk35,000 on regular basis for more than six months of last year. He pays Tk18,000 as house rent and utility bills every month.

“I had to take financial support from my relatives to meet my family expenses as my salary was irregular. Daily expenses priority, rather than saving a single penny. How can I manage the expenses now if the price of essential commodities goes up unabated?” Raquib questioned.

Commerce secretary Jafar Uddin observed the commodity market price differently. “Compared to the international market, the price of essential commodities has increased very little. Even so, the government holds regular taskforce meetings. The commerce ministry has appointed officials to monitor imports so that the gap between the import and the retail price remains narrow. I hope the price of essential commodities will not increase further in the Ramadan,” he said.

People’s income has dropped due to the pandemic-induced economic slowdown. Many employees have lost their jobs. For example, at least 70,000 workers at 106 ready-made garments factories have been laid off. The estimation of job cuts around the other sectors would be many more.

A survey of the state-run Bangladesh Bureau of Statistics (BBS) finds that 20 per cent of working people in Bangladesh have experienced salary cut as an impact of the pandemic. BBS conducted the survey during 13-19 September, 2020. The per capita family income reduced to Tk15,492 from Tk19,425 within five months the coronavirus hit the country in March 2020.

The pandemic-time shutdown saw fall of demand in the market, but family expenditures did not fall compared to the rate of salary cut. The BBS survey report says per capita family expenditures reduced to Tk14,119 in August from Tk15,403 in March. The reduction of expenditure did not provide relief the affected families. A private research institute South Asian Network on Economic Modeling (Sanem) published a study on 10 March this year, saying 62 per cent of working people received curtailed salaries during March-December of 2020.

The price hike of rice, soybean oil, sugar, garlic, broiler chicken, wheat, beef, powdered and liquid milk in Bangladesh is linked to costly import as the products become expensive in the source countries. Moreover, the price of some raw materials like clinker, cotton, fertilizer, cattle and poultry feed, log, aluminum, tin and others have also increased in the international markets.

What are the reasons of price hike? In February, an American multinational investment bank JPMorgan Chase published a report stating the global market of commodities has started to revamp with the availability of Covid-19 vaccine.

Moreover, imported product prices are on increasing trend due to a surge in freight rates. Bangladesh imports mostly from China. Importers said that a freight through 20-foot container from the Shanghai Port to the Chittagong Port now costs $1,780 maximum. The freight rate was around $800 in the pre-pandemic time.

Abul Bashar Chowdhury, chairman of BSM Group, Bangladesh’s leading food importer, termed the present price chart of commodities as rational compared to the international market. He said there is less possibility of price fall before July this year.

“The stock of imported foods is adequate now. So there is no fear of further price hike in Ramadan,” Bashar said.

A certain Mostafa Kamal was shopping in Kawran Bazar on 20 March. The price hike in the kitchen market had already chocked the private job holder. One kilogram Sonalika chicken was sold at Tk300, flour at Tk35-39, vegetables at Tk40-50, one litre of soybean oil at Tk139 and four pieces of lemon at Tk40-50.

“My wallet is empty very soon after I start kitchen shopping,” he said.

Traders said that price hike of some commodities is linked to international market. “If the government reduces customs duty and tax on import, price of some products like soybean oil and sugar will be reduced,” they said.

Since the 2019-20 fiscal, the government has levied 15 per cent on import, production and distribution of soybean. The importers have to pay four per cent advance tax on imports while the traders pay five per cent VAT at both production and distribution stages.

Director of City Group Biswajit Saha said, we have to pay Tk 25-26 in duty and tariff per litre of soyabean. If the government lowers tariff, the common people will be able to buy commodities at a lower price, he added.

* This report appeared in the print and online edition of Prothom Alo and has been rewritten in English by Sadiqur Rahman