Market monitoring to check price spiral

Despite repeated assurances from the government and the traders, the prices of essential commodities registered a hefty rise with the beginning of the holy Ramadan. No mechanism could check the unbridled rise of the prices of the essential items -- especially onion, eggplant, cucumber, green chilli etc.
In order to arrest the growing prices of essentials, the government banned exports of several items from June 25 and tightened vigil on markets. The state-run Trading Corporation of Bangladesh (TCB) started sale of some products at low prices in open market ahead of Ramadan. All these measures failed to contain price spiral. In fact, such market intervention plans are quite inadequate to cool down the heated market, say some market watchers.
On the first Friday of Ramadan, eggplant was reportedly selling at Tk 80-100 per kilogram in Dhaka's kitchen markets against Tk 50-60 a week back, cucumber at Tk 48-50 against Tk 25-30 and green chilli at Tk 60-65 against Tk 50-60. The prices of potato, garlic and ginger also registered a stiff rise. Per kg of potato was sold at Tk 25-26, garlic at Tk 80-85 and ginger at Tk 160-240.
A couple of years ago, the High Court had asked the government to take immediate steps against those businessmen who are considered dishonest on real or perceived grounds. The court asked the authorities to monitor the kitchen market situation by setting up mobile courts and take prompt action against the delinquent businessmen.
In fact, there is no logic behind a sudden jump in the prices of such essential commodities. There is no hartal or political unrest now that may obstruct normal flow of merchandise to the capital city. Even rains can hardly fail to prevent the arrival of commodities in the city from the far-flung rural areas. But the cunning businessmen effected hikes to the prices of essentials well ahead of the Ramadan. They did it as they were promise-bound to the government not to raise prices of essentials during the month of Ramadan.
The commerce minister tried in vain to contain price-hike of the essentials before the Ramadan. He held a series of meetings with the apex chamber body, leading businessmen, retailers and wholesalers on how to keep the prices under check. He repeatedly told them about the government's preparations on keeping the prices of essentials stable in the local market, especially during the Ramadan. His exhortations had  hardly any impact on the market.
To cite an example, onion is being sold this week at prices which are 40 per cent higher than what these were two weeks ago. The retailers took advantage of the reported rise in import price of onion by India and raised its price to Tk 40 per kg from Tk 30 in just three days.
It is very interesting to note that the retailers and the wholesalers in the market always blame each other for rises in the prices of essentials. Retailers say the wholesalers, who stock or hoard essential commodities, are responsible for the soaring prices while the wholesalers say the retailers are bumping up the prices to make a few fast bucks. This time also, there is no exception to that practice.
Market watchers feel that the trade bodies and the people should build up resistance against the unscrupulous businessmen who are allegedly enhancing prices of essentials by hoarding in the holy month of Ramadan to derive extra profit. For this the government should remain with the trade bodies and the people.
It is true that in the open market economy the government is not usually expected to interfere directly in determination of prices, but there should be a regulatory body to monitor and punish the culprits engaged in price manipulation. The law provides that a guilty person can be penalised for a maximum of three years in jail and Tk 0.20 million in fines. Hoarders and artificial price-hikers will get the maximum punishment, according to the law.
As the government has no direct control over the market, it is largely left in the hands of the businesses. Many businessmen are not scrupulous and the 'greed' factor is strong among them. It is this particular group of business people who, taking the advantage of free market economy, try to manipulate it for their benefit. Because of imperfections in the market and absence of free competition, they create a kind of monopoly, holding the general consumers hostage.
 A strong market monitoring system should therefore be put in place, considering the fact that prices here rise not only due to any mismatch between demand and supply but also because of unethical profiteering instincts of a section of traders. In order to check this, an effective regulatory framework, coupled with a proper enforcement mechanism, should be developed for facilitating a rule-based market system.
szkhan@dhaka.net