Persistent rise in the prices of foodstuffs is a constant concern for the ordinary public nowadays. The interim government has been wrestling with the problem since it assumed office following the July-August uprising. Even before that the previous government which was overthrown during the uprising did also try to bring down the stubbornly rising food price since the end of the Covid-19 pandemic. A recent World Bank update on food security also reported this incomprehensible phenomenon of uninterrupted food price hike over the last three years in Bangladesh. During the period, the food prices have been on the rise at rates between 5.0 and 30 per cent, while the food inflation over the period remained over 9.0 per cent (at present it is 13.8 per cent and in the urban areas the rate being still higher at 14.63 per cent). This inflationary trend, however, is common in other South Asian nations and elsewhere in the world. But their difference with Bangladesh is that food price in those countries has both risen and fallen. In November and December of 2021, the foodstuffs prices in India, for instance, did rise between 2.0 and 5.0 per cent. Between January and November 2022, the food price hike ranged from 5.0 to 30 per cent. But since December of that year (2022), the rate of rise in food price fell and fluctuated between 2.0 and 5.0 per cent. But the prices of foodstuffs in Bangladesh have only gone up from 5.0 to 30 per cent during the period under review. Also, in neighbouring Nepal, food prices saw an increase in November and December of 2021 between 5.0 and 30 per cent. But the next month (January 2022), the trend fell and then rose. However, in December 2023, food price was stable in that country. Even in Sri Lanka, the rate of food price hike from November 2021 to March 2022 was between 5.0 and 30 per cent. During the next one year (from April 2022 to March 2023) the food price hike peaked to over 30 per cent. According to the World Bank's four categories of food price hike, it is in the highest (fourth) category when the rate of price hike crosses 30 per cent.
Unsurprisingly, the island nation went bankrupt in May 2022 as it defaulted on its debt for the first time since its independence in 1948. After that the prices went on rising and falling until during July-December (2023), the trend fell below 2.0 per cent. In October the food inflation there was 1.3 per cent.
But why is the picture in Bangladesh so different from its neighbours? The government has used traditional measures like reducing import duties and VAT on foodstuffs, mounted strict market monitoring with occasional penal measures against traders found selling basic commodities at exorbitant prices, especially when those exceeded the prices set by the government from time to time, but to no avail. Meanwhile, the central bank, the Bangladesh Bank (BB), has continued the contractionary monetary policy to fight inflation through raising bank interest rates and limiting the supply of money and credit as it is the tested method worldwide to reduce the flow of money in the economy. However, so far the policy does not seem to have worked for Bangladesh. Though it is up to the experts to find out what has gone wrong so that the widely practised inflation control tools are not working in the case Bangladesh, common sense dictates that the market in Bangladesh is different from that in the developed capitalist economies where the law of demand and supply operates in the manner it should, ideally. In fact, here non-market forces such as the rent-seekers in the name of no end of so-called workers' unions and welfare societies collect tolls at multiple points on the roads and highways starting from the producers of foodstuffs in the countryside till the commodities reach the cities including the capital, Dhaka. A report in this connection published in the print media recently says that just to meet the operating cost of the so-called road workers' association, tolls worth Tk15 billion is being collected annually. The arrangement was introduced by Shajahan Khan, former shipping minister, who also held the post of the president of the workers' federation, and since September 2020, he had been running the racket till the ouster of the regime on August 5 this year. Sadly though, the rent-seeking racket is still running, though its ownership has now changed hands. The money these rent-seekers charge from transports, obviously, adds to the prices of the foodstuffs finally brought to the city's kitchen markets. Let's not forget the syndicates that manipulate the essential commodities' prices at the wholesale level. These are but known and oft-discussed elements working to distort the market. Though these are so well known non-market forces ruling the market, no government thus far could take any effective measures to discipline them.
Small wonder that the western-trained economists often fail to understand this phenomenon that renders their measures to curb inflation ineffective. While the abstract figures about inflation, its rise and fall, are the economic experts' concern, fallout from it in the kitchen market is something rather concrete. The ordinary people are instantly impacted by it. When they see that there is no end to this price hike of foodstuffs in sight, while the purchasing power of whatever common people earn is going down by the day, it becomes an issue of survival. Obviously, this has meanwhile taken an explosive turn. The interim government needs to be aware of the dangerous situation obtaining in society having to do with essentials' price hike. It should, therefore, go all out and use both conventional and non-conventional means to combat inflation and bring down food price.
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