Almost all -- government, central bank and consumers -- are now unanimous that inflation has emerged as a monster and it has to be contained at any cost.
The central bank that plays a critical role in taming high inflation has been pursuing a contractionary monetary policy stance for more than a year. Some of its actions, however, proved to be counterproductive as far as the goal of containing inflation is concerned. The release of high-powered money in the economy is one such action, experts believe.
Actions initiated by the government to address the problem of high inflation, in most cases, lacked substance. People in charge of overseeing the price situation lacked effort and had no control over the people dealing with essential commodities. Undoubtedly, it has been a management problem.
There is no denying that high international prices of commodities during the pandemic and post-pandemic days had a major role in the price hike at home. However, the shortage of dollars and the depreciation of the Bangladesh Taka made the situation worse. Many have questioned the wisdom of the central bankers to keep the value of the Taka artificially high year after year. Then again the air is rife with speculations about the flight of a substantial volume of capital in recent times.
Consumers are always at the receiving end. What they receive are blows below their belts. Poor, low-income and middle class people are now paying through their noses for almost every food and non-food item. There have been stories galore highlighting their plight in print and social media these days.
The inflation rate, according to official estimates, has been near the double-digit mark for the past many months. Last month, the rate came down marginally on the back of a slight decline in food prices. But non-food inflation recorded a small rise in that month.
Against such a difficult price situation, two state entities overseeing the production and marketing of two important utilities -- power and water -- are reportedly contemplating yet another hike in rates. The power division of the government says it has no other option but to raise power tariffs to phase out huge subsidies in the next three years, as suggested by the International Monetary Fund (IMF). The government can now arbitrarily raise power rates since it, through an amendment to the relevant Act, had abolished last year the provision of public hearing organised by the Bangladesh Energy Regulatory Commission (BERC) on any proposal to raise gas or power tariff.
The government last year also took a programme to raise power rates every month and implemented the same until March. It then skipped the hike in the remaining months of the year for reasons best known to it.
If the government enforces the decision to hike the power rate every month, it would hurt the consumers hard, for every production unit would pass their additional cost of production on to the consumers.
Another utility provider--- the Dhaka WASA, which has been raising water tariffs every year unfailingly, is contemplating yet another big raise. The Act that facilitated the establishment of DWASA empowers the corporation to raise water tariffs by 5.0 per cent annually. The DWASA has always felt the necessity of a rate hike. In some years, the rate of increase was abnormally high. That is why the water tariff which was Taka 5.0 per unit has gone up to over Tk. 15 in a matter of a few years.
The plight of the consumers would only worsen further if the government allowed any hike in power and water tariffs in this difficult time. Hopefully, the authorities would look into the pros and cons in the right perspective before making a decision.
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