Welcome to Business Outlook
Related Articles
Prices of protein items are soaring past the purchasing capacity of the middle-class due to price hikes of the items in the local market ahead of Ramadan that will begin from the third week of the current month.
Price Hike of Broiler Chicken
The country’s burgeoning middle-class is forced to compromise more with protein items since the prices of chicken, egg, fish, beef and mutton went through the roof in the city last month. It is reported that the price of broiler chicken soared to Tk 240 a kilogram while beef and egg became costlier. Broiler chickens and eggs, known as poor men’s protein, continued becoming costlier for the past one month. The price of broiler chicken increased by Tk 80-90 a kilogram on the city markets during the period while the prices of a quartet of eggs shot up to Tk 50. Rezanur Rahman, who relies on his fixed monthly income, said he had no way but to increase the weekly protein-less day to tackle the current price hikes of chicken, egg and fish.
Govt’s Monitoring Agency Ineffective
Retailers said that farm owners and wholesalers increased the prices of broiler chicken and egg abnormally in the pretext of the price hike of poultry feeds. They said that wholesale prices of the items were rising almost every day on the market. Amid the gradual price hike of broiler chicken and egg, the price of beef also rose in the city market. Many low- and middle-class families have already dropped red meat from their menu. Many said the local commodity market becomes the ideal one for the open market economy thinkers as businesses are dictating the prices for maximising profits amid silence of consumers’ right protection body and price competition commission. They said the presence of such government bodies was ineffective.
Poor In Queue From Dawn
The struggle of the middle-class people for food items has started when poor people are already making a beeline for essential items at the government-run open market sales spots. Failing to cope with the continuous price spiral of essential items since the past year, many tried to buy rice and flour at subsidised rates to meet ends. It has been reported that many even reach the OMS spots in the dawn. Mohammad Alam, 68, a resident of Shahidnagar in Lalbagh area, is one of them who began queuing at about 4am at an OMS point near Azimpur Chhapra Masjid since price hikes of essentials made his four-member family life simply tough. He said he made the mark at OMS point at dawn so that he could buy the food items before the end of the OMS operation on the day.
Unequal Income Distribution
Such struggling for food items, the foremost prerequisite for nutrition, by the poor and middle class will not make any difference for those policy makers who are obsessed with the country’s growth in gross domestic products. They are pleased with the growth statistics and hardly care about the unequal distribution of economic gains over the years. It is the unequal distribution of economic gains that should be blamed mainly for hunger among the vast majority of the population amid the external shocks. Had there been improvement in distribution of assets over years, people might not stand in queue for ration in the early morning.
Middle-Class Trapped
Same things are also applicable for the vast majority of middle-class people who are trapped between their stagnant income and the price hike of essentials. The country’s current economic policies cannot ensure sustainable income for the majority population. They are vulnerable to economic shocks which become complicated due to volatility in market prices and lack of market monitoring. Volatility in the price of essential consumer products is nothing new in the country. Price hikes of essentials with the approaching holy month of Ramadan have been common over the past one decade. Market analysts said an unholy alliance had been active to make abnormal price hikes of items on various pretexts before the fasting months when demand for particular items such as sugar, edible oils increased.
Challenges Ahead of Ramadan
Amid widespread criticism, the government policy makers held meetings with the businesses in a bid to check the price hike. Their mission was completed when the businessmen assured them of price stability during Ramadan. Triumphant policy makers finally gave a statement that there were no price hikes of essentials in the holy month. But unlike previous years, the upcoming fasting month is going to be challenging. First of all, businessmen will have readymade answers of dollar shortage for causing price hikes of essentials. None should be surprised when the businessmen will even tag dollar shortage for price hike of locally grown fruits. That the price hikes of locally grown items be it fruits or other commodities are the outcome of the upward adjustment of fuel oils and fertilisers during the August-November period of 2022 and their domino effects on every aspect of life.
Wage Remains Stagnant
However, local businesses lack capacity to identify the actual reasons for the price hike of the essentials. This suggests that speculation is highly active in the local market when monitoring bodies hardly monitor the market with proper analysis backed by authentic data. The performance of the monitoring body was poor, said Consumers Association of Bangladesh president Ghulam Rahman. As the wages of the majority of consumers did not increase compared to high inflation, many consumers had to struggle to make ends meet. “Many rely on savings and borrowings to overcome the price shock,” said the CAB president, adding that there was no relief for millions of consumers. Local think tank, the Centre for Policy Dialogue, said in an analysis on December 17 that workers in 42 sectors were unable to afford basic needs like food, education, and health with the minimum wage. Another local think-tank SANEM, between 51 per cent and 60 per cent female garment workers earn less than their living costs.
Purchasing Power Erodes
The reality is that the prevailing high inflation has pushed numerous households below the poverty line since the distribution of economic gains over the years has been unequal, said former Bangladesh Bank governor Salehuddin Ahmed. “The purchasing power of the majority of people is decreasing amid high inflation and growing income inequality,” he said. Economists said steps from the government should be taken to increase income generation scopes. But such steps are missing because of dull private investment. Public investment is mainly political and flawed. Many government investment projects under the Annual Development Programme are proved to be overvalued, time consuming and less economically viable.
Import Drops
Meanwhile, the Bangladesh Bank policy to tighten imports to increase reserves holding as per conditions of the International Monetary Fund in connection with its $4.7 billion loan posed two risks. One of them is the availability of many essential imported items due to discouragement on import. Letter of credit on six products including soybean oil, palm oil and sugar dropped in January although BB has issued several circulars over the past couple of months to keep the opening of LCs normal for the imported essentials. The other risk is consolidation of the cartel over the imported products in an import-dependent country like ours. There are many small importers who cannot keep their import business running.
