Strategy for addressing inflation

The Bangladesh Bureau of Statistics (BBS) has reckoned that the inflation for September has dropped with both food and non-food prices registering a decline. According to the BBS, the Consumer Price Index (CPI) settled at 9.92 per cent in September from 10.49 per cent in its previous month. The CPI for food saw a decline from August's 11.36 per cent to 10.40 per cent last month and for non-food items, the decline was to 9.50 per cent from 9.74 per cent during the same period.

Easing of inflation is news for celebration. However, the BBS has a dubious record of going about statistical jugglery. One hopes it has come out of its endemic 'what the doctor ordered' mould. This positive market trend looks quite intriguing because the market reality hardly corresponds to the BBS findings. From the first week of the last month, all varieties of rice, the main staple, registered a price hike by Tk 2.0-4.0 a kilogram. Potato also became dearer by Tk 5.0-10 depending on its variety and quality. Prices of cooking oil, sugar and milk ---liquid or powder---remained static. Onion, garlic, ginger and other spices either saw a slight increase or decrease making hardly any difference in impact on the price index. In fact, onion which has wide use in Bangalee cuisine became dearer.

It is in the kitchen market where a few vegetables in the first weeks got a bit cheaper but the last weeks negated the positive impact, if any, because of price escalation of those items. So far as the toiletries, laundry and cleaning products are concerned, those were selling at prices raised abnormally from long before. Such products often produced locally by multinational companies or imported from neighbouring countries where those are produced similarly under their auspices are not known to have slashed the prices. Additionally, a few such items sell at double or three times the rate of the manufacturing country. Amazingly, price hikes of such products are never protested.

Even if the BBS claim could be substantiated, the market volatility right at this moment has been taken to yet another level. Notwithstanding the import of onion at a cheaper price from India, local variety sells at the previous rates. Since a kilogram of local onion is priced at Tk 115-120, the imported variety is not allowed to come down to where it should. The price difference is no more than Tk 10-15 between the two varieties. It is an old trick traders are used to following in order to maximise their profit. A report showed how the middlemen trigger prices of Hilsha. They ensure a profit of Tk 6.0-10 for each single Hilsha on the going rate at the fish jetty. The same happens with agricultural produce. A kilogram of long beans is priced at Tk 20-30 at the farm level but in Dhaka city the same is priced at Tk100.

The answer to why the government fixed prices cannot be implemented lies here. Time and again, this newspaper has focused on this missing link in the price chain. It can be addressed if the government is serious about doing so. The Bangladesh Road Transport Corporation (BRTC) has of late been doing well by not incurring losses. Well, it does in the operation of bus services but the loss is made up by its pool of goods-carrying transports. How? It has been serving various government departments and agencies in this business and earning profit.

The same theory can be replicated in carrying agricultural goods. If the BRTC expands its pool of trucks and pickup vans to directly carry produce from the farms to urban markets, both farmers and the transportation service under the government stand to benefit. Alternatively, the government can finance such a pool of vehicles for farmers on a cooperative basis. They will repay the loan in several instalments until the dues are fully cleared when farmers will be the owners of such vehicles. This is how the middlemen can be eliminated and farmers can supply directly to consumers in urban centres or anywhere their produce has demands.

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