Falling global commodity prices fail to benefit local consumers
Friday, 26 September 2008
Shakhawat Hossain
Consumers have not been benefited by the falling commodity prices as the retailers have not made adjustments with the wholesale rates, said a government report released Thursday.
The quarterly 'Food situation report' (April-June), prepared by the food and disaster management ministry, said the difference between retail and wholesale prices has widened in recent past.
"For rice and flour, retail and wholesale prices in Dhaka city move in the same direction parallel to each other during July/07-June/08 with percentage margin ranging from 4.0 per cent to 8.0 per cent for rice and 4.0 per cent to 11 per cent for wheat," said the report.
The report said margins for both rice and flour have gone up in May-June despite prices are on the wane.
"This indicates that at the time of falling prices retailers did not adjust prices as per wholesale prices," added the report.
Experts and consumer association of Bangladesh (CAB) said tendency of not making downward adjustment in prices of commodity items as per the falling prices is not new in the country, which benefits the traders most while deprives the general consumers.
"It is not surprising when you see very little reflection of falling global commodity prices in the local market," said Bangladesh Bank chief economist Mustafa K. Mujeri.
"Traders and importers are benefited while the consumers are losers under such a situation," he said.
Dr. Mujeri said the government waived duties on many products following request from importers and traders in the past, but price hike of those products could not be halted.
Bangladesh Institute of Development Studies (BIDS) director Zaid Bakth said consumers will be losers as long as the existing weak market monitoring by the government continues.
The import cost of major commodities has come down significantly due to falling prices in the global markets during the last couple of months.
"There is no significant reflection in the local market due to higher profiteering," Bakth said.
Consumers Association of Bangladesh (CAB) general secretary Quazi Faruque said the blaming the retailers only is not correct.
He said wholesalers should also be blamed as they dictate prices in absence of price regulation by the government.
Successive governments have long been trying without success to update the country's decade old consumers' protection law. The latest move by the caretaker government awaits gazette notification for more than one month.
"It is sad that the gazette notification has been delayed," Faruque said.
Experts, however, said there is little scope to address price issue in the proposed consumers' protection act. They suggested formulation of competition policy to address the issue.
Commerce ministry officials said a competitive policy is under review.
The ministry will hold a meeting next week to scrutiny opinions by ministries and divisions, trade bodies, non-government bodies and think-tanks on the draft policy, they said.
The ministry plans to establish a permanent price monitoring cell to monitor price situation. But there is little progress although more than six months have elapsed.
Consumers have not been benefited by the falling commodity prices as the retailers have not made adjustments with the wholesale rates, said a government report released Thursday.
The quarterly 'Food situation report' (April-June), prepared by the food and disaster management ministry, said the difference between retail and wholesale prices has widened in recent past.
"For rice and flour, retail and wholesale prices in Dhaka city move in the same direction parallel to each other during July/07-June/08 with percentage margin ranging from 4.0 per cent to 8.0 per cent for rice and 4.0 per cent to 11 per cent for wheat," said the report.
The report said margins for both rice and flour have gone up in May-June despite prices are on the wane.
"This indicates that at the time of falling prices retailers did not adjust prices as per wholesale prices," added the report.
Experts and consumer association of Bangladesh (CAB) said tendency of not making downward adjustment in prices of commodity items as per the falling prices is not new in the country, which benefits the traders most while deprives the general consumers.
"It is not surprising when you see very little reflection of falling global commodity prices in the local market," said Bangladesh Bank chief economist Mustafa K. Mujeri.
"Traders and importers are benefited while the consumers are losers under such a situation," he said.
Dr. Mujeri said the government waived duties on many products following request from importers and traders in the past, but price hike of those products could not be halted.
Bangladesh Institute of Development Studies (BIDS) director Zaid Bakth said consumers will be losers as long as the existing weak market monitoring by the government continues.
The import cost of major commodities has come down significantly due to falling prices in the global markets during the last couple of months.
"There is no significant reflection in the local market due to higher profiteering," Bakth said.
Consumers Association of Bangladesh (CAB) general secretary Quazi Faruque said the blaming the retailers only is not correct.
He said wholesalers should also be blamed as they dictate prices in absence of price regulation by the government.
Successive governments have long been trying without success to update the country's decade old consumers' protection law. The latest move by the caretaker government awaits gazette notification for more than one month.
"It is sad that the gazette notification has been delayed," Faruque said.
Experts, however, said there is little scope to address price issue in the proposed consumers' protection act. They suggested formulation of competition policy to address the issue.
Commerce ministry officials said a competitive policy is under review.
The ministry will hold a meeting next week to scrutiny opinions by ministries and divisions, trade bodies, non-government bodies and think-tanks on the draft policy, they said.
The ministry plans to establish a permanent price monitoring cell to monitor price situation. But there is little progress although more than six months have elapsed.