Food inflation is hurting
Monday, 22 November 2010
Shamsul Huq Zahid
None of the important people across the political divide seems concerned about what is hurting the common people most. It is food inflation.
In September last, according to the Bangladesh Bureau of Statistics (BBS), the food inflation almost touched the double digit (9.72 per cent), thanks to soaring prices of most food items.
The rural population, however, were the worst hit as the BBS estimated the food inflation in the countryside at 10.51 per cent
By now the overall food inflation at the national level must have crossed all the barriers to go well beyond the first double digit mark as the prices of most daily consumables including rice, flour, edible oils, onion, garlic, vegetables and spices have gone further up.
It is obvious for the government of the day not to discuss in public the price issues, particularly when the facts in this connection are unpalatable. But the ruling party has reasons to feel comfortable since its arch political rival has kept itself confined in issues that are not much relevant to the problems that have made the life of the common man really difficult.
However, in the backdrop of the government's complacency or the opposition's indifference, the grocery bill of millions of people has gone up by 50 to 60 per cent in a year's time leaving an unsettling effect on their life and living. The price survey carried out by the state trading agency, the Trading Corporation of Bangladesh (TCB) estimates a price-rise between 44 per cent and 52 per cent of rice and wheat over a period of last one year. The edible oils became costlier by 35 per cent during the same period.
The hike in the prices of the essentials has hit the poor and the low-income people hard. They are finding it really difficult to get both ends met. It is not food alone, the costs of transportation and house rent have also gone up. Even the middle and upper middle class are also feeling the pinch. Many have started cutting costs on daily necessities.
And inflation is hurting even more because incomes have not grown over the past one year, in most cases. But in the absence of any organized protest or demonstration of resentment against the rising food prices, the policymakers are not feeling the heat. However, when the media focuses increased attention on price situation, the government does what it is best at doing. It forms committees or cells in one ministry or another to 'monitor' the market. The output of such committees or cells has always been zero. Except for consuming tea and snacks at frequently held meetings and loss of fuels on visits to different city markets the members of such committees could hardly contribute anything to the desired task of lowering the prices of essentials.
But a section of policymakers tend to take the price situation rather lightly while trying to find a link between the price hike and the income level of all sections of the population. They give an impression that the people's income has increased to a level enough to absorb the price shock.
Unfortunately, this may be true for a small segment of the population. But the vast majority of the population is taking the main brunt of price hike of most consumables.
In fact, the country is now largely dependent on imports to meet the domestic demand for essential commodities. Such dependence, obviously, make the price situation vulnerable to any volatility in the international commodity markets. A case in point is the situation that prevailed in the years 2007 and 2008 when the prices of food items soared to a record level in the international market.
In the aftermath of the global financial meltdown, the prices of most commodities declined to some extent in the first part of 2009 internationally but the situation remained potentially vulnerable to any abnormality in supply of the same.
In recent months the prices of cereals and edible oils have come under substantial pressure because of their supply shortfalls. The crop failures in Russia, Ukraine and China due to natural calamities have pushed up the prices of cereals in the international market. The Food and Agricultural Organisation (FAO) has already projected a gloomy food price situation.
The UN has predicted that the bill for global food imports would top $1000 billion this year, putting the world 'dangerously close' to a new food crisis. The warning adds to the fear about rising inflation in emerging countries, including China and India. Actually, inflation has hit neighbouring India and China is now putting in place state mechanism to rein in rising inflation.
So, under the circumstances, the food price situation at home, it is feared, might remain tight in the coming months. There could be very temporary yet very insignificant relief soon after the harvest of the Aman crop. This is evident from the fact that the ongoing open market sale of rice by the government could not stop the prices of rice and flour from going up further.
The international market situation coupled with the government's dwindling food stock has been contributing to the rise in food prices in the domestic market. The official food reserve is now hovers around a half of the same a year back. The fixation of unreasonably low procurement price during last Boro season and the lack of serious attempt on the part of the government to import rice and wheat when international prices of cereals were relatively low have created an unstable situation.
Now it is high time the government took appropriate measures to keep the food prices at an affordable level. Otherwise, the official projection about inflation in the current fiscal might prove wrong.
None of the important people across the political divide seems concerned about what is hurting the common people most. It is food inflation.
In September last, according to the Bangladesh Bureau of Statistics (BBS), the food inflation almost touched the double digit (9.72 per cent), thanks to soaring prices of most food items.
The rural population, however, were the worst hit as the BBS estimated the food inflation in the countryside at 10.51 per cent
By now the overall food inflation at the national level must have crossed all the barriers to go well beyond the first double digit mark as the prices of most daily consumables including rice, flour, edible oils, onion, garlic, vegetables and spices have gone further up.
It is obvious for the government of the day not to discuss in public the price issues, particularly when the facts in this connection are unpalatable. But the ruling party has reasons to feel comfortable since its arch political rival has kept itself confined in issues that are not much relevant to the problems that have made the life of the common man really difficult.
However, in the backdrop of the government's complacency or the opposition's indifference, the grocery bill of millions of people has gone up by 50 to 60 per cent in a year's time leaving an unsettling effect on their life and living. The price survey carried out by the state trading agency, the Trading Corporation of Bangladesh (TCB) estimates a price-rise between 44 per cent and 52 per cent of rice and wheat over a period of last one year. The edible oils became costlier by 35 per cent during the same period.
The hike in the prices of the essentials has hit the poor and the low-income people hard. They are finding it really difficult to get both ends met. It is not food alone, the costs of transportation and house rent have also gone up. Even the middle and upper middle class are also feeling the pinch. Many have started cutting costs on daily necessities.
And inflation is hurting even more because incomes have not grown over the past one year, in most cases. But in the absence of any organized protest or demonstration of resentment against the rising food prices, the policymakers are not feeling the heat. However, when the media focuses increased attention on price situation, the government does what it is best at doing. It forms committees or cells in one ministry or another to 'monitor' the market. The output of such committees or cells has always been zero. Except for consuming tea and snacks at frequently held meetings and loss of fuels on visits to different city markets the members of such committees could hardly contribute anything to the desired task of lowering the prices of essentials.
But a section of policymakers tend to take the price situation rather lightly while trying to find a link between the price hike and the income level of all sections of the population. They give an impression that the people's income has increased to a level enough to absorb the price shock.
Unfortunately, this may be true for a small segment of the population. But the vast majority of the population is taking the main brunt of price hike of most consumables.
In fact, the country is now largely dependent on imports to meet the domestic demand for essential commodities. Such dependence, obviously, make the price situation vulnerable to any volatility in the international commodity markets. A case in point is the situation that prevailed in the years 2007 and 2008 when the prices of food items soared to a record level in the international market.
In the aftermath of the global financial meltdown, the prices of most commodities declined to some extent in the first part of 2009 internationally but the situation remained potentially vulnerable to any abnormality in supply of the same.
In recent months the prices of cereals and edible oils have come under substantial pressure because of their supply shortfalls. The crop failures in Russia, Ukraine and China due to natural calamities have pushed up the prices of cereals in the international market. The Food and Agricultural Organisation (FAO) has already projected a gloomy food price situation.
The UN has predicted that the bill for global food imports would top $1000 billion this year, putting the world 'dangerously close' to a new food crisis. The warning adds to the fear about rising inflation in emerging countries, including China and India. Actually, inflation has hit neighbouring India and China is now putting in place state mechanism to rein in rising inflation.
So, under the circumstances, the food price situation at home, it is feared, might remain tight in the coming months. There could be very temporary yet very insignificant relief soon after the harvest of the Aman crop. This is evident from the fact that the ongoing open market sale of rice by the government could not stop the prices of rice and flour from going up further.
The international market situation coupled with the government's dwindling food stock has been contributing to the rise in food prices in the domestic market. The official food reserve is now hovers around a half of the same a year back. The fixation of unreasonably low procurement price during last Boro season and the lack of serious attempt on the part of the government to import rice and wheat when international prices of cereals were relatively low have created an unstable situation.
Now it is high time the government took appropriate measures to keep the food prices at an affordable level. Otherwise, the official projection about inflation in the current fiscal might prove wrong.