Global markets, domestic inflation

---

Shahiduzzaman Khan
Against the backdrop of spiralling prices of essential commodities, the government weighed various options to put a brake on it. The latest is the report of an inter-ministerial committee that recommended taking up legal actions against those involved in jacking up the prices of several essentials commodities, especially soybean and onion.
According to reports published in the FE this week, the interim government appeared tough in dealing with the delinquents involved in raising the prices of essentials for windfall profit. The authorities are also considering a move to form a price commission to deal with the prices of essentials. The inter-ministerial committee recommended for setting up of the commission -- a body that is operational in number of countries of the world.
What is regrettable is that the monitoring committee found no logical ground behind such abnormal price hike of some commodities. There are sufficient stocks of soybean oil and the onion in the kitchen markets. But how prices of these essentials commodities have been jumping every day is a matter of concern. In the international market, the prices of soybean oil marked a sharp rise in recent times but Bangladesh has sufficient stock to feed its users with edible oil imported earlier. The products imported earlier should not cost more as it was bought at lower than current prices. But a section of business syndicate is reportedly raising its price arbitrarily and making a windfall profit.
By showing Indian ban on onion import, local retailers raised the onion price overnight, which jumped to almost double the price in a few days. Although India hinted at relaxing the import ban on onion, rice and pulses, there is no reflection of this on the local wholesale markets. In fact, abnormal price hike of such essential commodities is fuelling food inflation in the country. The worst sufferers are the poorer sections of the people who cannot afford to buy foods with meagre income.
After the present caretaker government took over, widespread corruption and irregularities could be contained to a considerable extent. But the government is having tough times in restoring confidence of the business people. Many businessmen were put behind the bar for their alleged corruption and malpractice. The joint forces put the operations of the black money on hold. As a consequence, many business establishments were closed, some others became sick. A section of business people, fearing crackdown by the joint forces, refrained themselves from doing their normal business activities. In order to ensure a congenial business environment and restore confidence of the business people, the government announced formation of the Truth Commission. Meanwhile, a number of the detained businessmen have come out on bail. All these developments are slowly having a positive impact on the market situation.
A syndicate of unscrupulous traders, as the allegations run on real or perceived grounds, is responsible for raising the prices of imported essentials by creating their artificial shortfalls. The syndicate is also held responsible for price hike of essential items such as onion and soybean oil. During earlier days of turmoil and political unrest, the syndicate became active and manipulated the prices of essentials as well. The retailers believe that the immediate past alliance government was well aware of the existence of such syndicate, but failed so far in taking appropriate action against them.
Rice market is also being reportedly controlled by a nexus of syndicates for the last few months. Prices of different varieties of rice are not coming down even during this harvesting season. Consumers expected that with the arrival of aman crops, prices would come down considerably. Unfortunately, it did not happen. Wholesalers cite the rising transport and inflated production costs and non-economic factors as the reasons but the moot point is: rice price ranges between certain levels and then go up suddenly without any justifiable reasons. Price rise does not follow the usual demand and supply situation. As such, it, as all concerned believe, is again the manipulators who control the rice market. The same is the reportedly case with soybean oil and pulses.
The prices of essentials, barring a few commodities like potato and lentils, are much lower here than those in the neighbouring countries, according to some. But how far is such claim acceptable? Items like potato, lentil and eggs at the retailers level are far more costly in Bangladesh than in India. Indian sugar and eggs are coming to Bangladesh through informal ways. Rice and flour are also cheaper in India than in Bangladesh. Vegetables are cheaper there as well. Excepting hilsha, all other fish varieties, poultry and mutton sell at lower prices in India than those in Bangladesh. Indian fruits are being exported to Bangladesh because of their cheap prices. It is not clear as to how the claim about prices of essential items being cheaper in the country than in other neighbouring countries is made.
The caretaker government has some additional tasks to perform other than holding free and fair election and ridding the country of corruption. It should identify, with the help of the joint forces, the syndicates, if they exist, and are found responsible for irrational price-hike of essential items. Appropriate actions should follow in the light of objective findings about the operations of any such syndicate. Meanwhile, the transportation system for carrying essential goods from one place to another should be streamlined. At the same time, non-economic factors disrupting the supply chain should also be addressed in befitting ways.