Cost of living crisis deepens as key essentials hit record highs in 2023

The outgoing year 2023 has been a grim one for low-income and lower-middle-class households in Bangladesh, with most essential commodities reaching record highs, continuing the upward trend from 2022.
With wage growth way lower than inflation, the price pressures exposed millions of people, who had been struggling to stay afloat from the Covid fallout, to the poverty trap.

Except for staple rice, virtually all other essential items saw remarkable price increases, ranging from 15 per cent for flour and bakery items to 220 per cent for potatoes, according to government and private data.
Potatoes, a food staple, soared to an all-time high of Tk 80 per kilogram in December, according to kitchen market data.
Slack market monitoring further compounded the woes of people already struggling with high inflation.
Experts credited the escalating price hikes to several factors, including limited action against oligopolies, rising import costs due to the taka depreciation and stagnant income growth.
Finer flour (maida), after a brief dip in the middle of the year, reached its previous record high in December, climbing to Tk 85 per kilogram. Coarser flour (atta) also increased, reaching Tk 70 per kilogram. City groceries reported selling loose maida for Tk 72-75 and loose atta for Tk 63-65 per kilogram.
Onions set a four-year record, reaching Tk 180-220 per kilogram between December 8 and 10.
Sugar prices hit an all-time high of Tk 150-170 per kilogram in November, marking a further 26 per cent increase compared to 2022, according to the Trading Corporation of Bangladesh (TCB).
Except for December, consumers paid additional costs of 15-20 per cent for cultured fish varieties like rui, katla, tilapia, pangas and koi.
On a positive development, beef prices cooled off in November, dropping to Tk 650-700 per kilogram. However, for most of the year, it ranged between Tk 780-850 per kilogram, showing a 12-15 per cent increase compared to 2022, according to the Consumers Association of Bangladesh (CAB).
CAB President Ghulam Rahman criticised the government's leniency towards market manipulators, despite evidence of their involvement in price manipulation.
Pointing to the sudden surge in onion prices by Tk 50-60 per kg following India's export ban announcement on December 8, he called for strong penalties against such practices.
The CAB president further pointed to the paradoxical situation of record vegetable, onion and potato prices during peak harvest season, linking it to weak market monitoring. "Can you imagine? Green chillies hit Tk 800 per kg during the rainy season!"
Mr Rahman said the government attempted to enforce fixed prices for potato, onion and sugar but failed to implement it.
Apart from food expenditure, he also pointed out notable cost escalations for medicine and housing this year. Mr Rahman said the commodity market volatility is likely to continue in 2024.
On the kitchen market front, eggs, one of the key protein sources for low-income people, made the headlines this year. Egg prices soared to an unprecedented Tk 180 per dozen in August, further squeezing the limited-income people.
Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), echoed Mr Rahman's concerns about weak market monitoring.
He linked the escalating food prices to inadequate market management and observed that despite falling global commodity prices, the domestic market remained unaffected.
"From importers to producers to retailers, there's a huge price gap that authorities should have addressed," he commented.
Professor Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), reminded the 12.54 per cent food inflation rate in August 2023 -- the highest since October 2011.
He noted that the average general inflation for 2023 stood at 9.42 per cent until November, while wage growth for low-skilled workers lagged at 7.72 per cent.
"This translates to a substantial loss of real income for these workers," he concluded, highlighting the significant discrepancy between wage growth and soaring prices.
Farm economist Prof Dr Rashidul Hasan of Bangladesh Agricultural University said a hike in input prices resulted in a production cost rise by a minimum of 20 per cent, putting an impact on the food market.
He said prices of import-based food also increased amid a notable appreciation in the US dollar against local currency.
The farm economist also said that adverse climatic conditions throughout 2023 hampered crop outputs, eventually contributing to the local market volatility.
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