Price juggernaut crushing common people
Thursday, 25 November 2010
Enayet Rasul Bhuiyan
THE comparative prices of some basic food and related products should put into focus the constant torments faced by the poor from the relentless rise in prices. For example, the price of one kg of coarse rice in 2006 was Taka 17 which soared to Taka 35 in October last. This price has further increased during the last one month. Similarly, the price of ata (flour) increased from Taka 18 to Taka 32 per kg over the same period. The price of one litre of palm oil rose from Taka 39 to Taka 85; soya bean oil from Taka 48 to Taka 92 per litre; masur pulse from Taka 45 per kg to Taka 105; garlic from Taka 20 to Taka 170 per kg; a broiler hen from Taka 70 to Taka 145.
This is only a representative list of kitchen items; their prices appear to have shot up by 100 per cent or 150 per cent or even more in some cases during the period under review. There are other kitchen items the prices of which have also been rising in like fashion. Thus, the distress of the non-affluent consumers of such items should be obvious.
The rate of inflation was assessed to be 7.87 per cent in the month of August, above Bangladesh Bank's 6.5 per cent target. Independent and more reliable estimates of inflation are considerably higher at over 10 per cent. The rate of food inflation is considered to be well above the double digits.
The Consumer Association of Bangladesh (CAB) in its last stock-taking assessed that percentage increase of costs of living was well over the double digits in 2010. Food prices that have a way of creating the justification for increasing the prices of other commodities and services have been on the higher side all throughout 2010. Besides, several increases in the charges of power, gas and fuel oil also helped to raise production costs which in turn led to higher prices and charges respectively of products and services. House rent, costs of education, medical charges, etc., also rose notably. The higher price trends and rising costs of living thereof remain unabated .
Two consequences in the main are noted from the rising prices. Firstly, the price escalations have much increased the cost of living of ordinary people. The poor and the extreme poor comprise nearly half of the population. Understandably, price increases tend to have the most unhappy effects on them and this is more the case in the present price rises as prices of mainly common but indispensable consumption items of the poor are rising. Thus, the purchasing power of the poor is getting eroded. If the present conditions of high prices persist, then the poor will be the poorer and poverty's pangs will deepen in the country.
Besides, even in their poor state, the poor, when they are blessed with relatively stable or improved purchasing power, create demand for a large number of goods and services beyond food and other basic things. The production and marketing of these not so essential products then help to create employment and income for people or the economy grows in the process. But with their purchasing power getting badly battered, the poor or the common people are unlikely to demand such non-essential items in good quantities and hence a slump in their production can be expected with sorry consequences of the same on their producers and sellers. Thus, overall deepening of the poverty situation, worsening unemployment and economic stagnation are likely to be the fallout from the unabated price rises of essential products.
All concerned quarters are clanging their bells hard for the government to sit up and hear the noises they are making to give them relief from price rises. But so far, the response of the government has not been proportionate to the outcry. The government must demonstrate its adequate responsiveness to a demand which is central to the needs of people and also in the vital interest of the economy.
It is noteworthy that the ruling party in its election manifesto declared prominently that on going to power they would ensure the keeping of the prices of rice, cooking oil, etc., stable and within the purchasing power of the common people. It was also pledged in the manifesto that highest production of these essentials within the country would be achieved; timely imports of essentials would be carried out and the same would be sold at fair prices; monitoring of the markets would be carried out regularly and effectively; the syndicates engaged in profiteering and hoarding would be smashed; extortion activities eliminated; and an organisation would be created to control prices of essential commodities in the interest of the consumers. But after about two years of taking charge, this government appears to have succeeded little in living up to their election pledges about price control and stabilisation.
There have been some good sides to the economy's management in recent years and the same were discussed appreciatively in the national press such as stable and increasing foreign exchange reserve, better collection of revenues, etc. But common people understandably do not have so much interest in these macro economic indicators. For them, the main concern is the cost of essentials or daily consumables and the charges they have to pay for various regular and unavoidable services. In other words, for common people, the cost of living is a very vital issue and government's creditable activities in other spheres are overshadowed by their concern with the increasing cost of living.
Free market principles in many countries are not meant to be freestyle operation of traders or sellers. Governments in these countries take steps against undue profiteering. But this has not been the case in Bangladesh. The government here is seen as rather motionless as traders increase prices without any justification for the same. Apart from words of advice to traders, the government seems to have no effective strategy in place as prices of goods get most unreasonably increased by substantial margins and the high price lines are retained. The importers of essential goods contend that they are only passing on the higher costs of imported goods to consumers. But this argument may be only partly true. In most cases, they are found to be hiking prices much above the increases in their import costs.
Thus, the tormented consumers in the country expect from the government the fastest taking of measures to give them relief from the price juggernaut which is crushing them.
THE comparative prices of some basic food and related products should put into focus the constant torments faced by the poor from the relentless rise in prices. For example, the price of one kg of coarse rice in 2006 was Taka 17 which soared to Taka 35 in October last. This price has further increased during the last one month. Similarly, the price of ata (flour) increased from Taka 18 to Taka 32 per kg over the same period. The price of one litre of palm oil rose from Taka 39 to Taka 85; soya bean oil from Taka 48 to Taka 92 per litre; masur pulse from Taka 45 per kg to Taka 105; garlic from Taka 20 to Taka 170 per kg; a broiler hen from Taka 70 to Taka 145.
This is only a representative list of kitchen items; their prices appear to have shot up by 100 per cent or 150 per cent or even more in some cases during the period under review. There are other kitchen items the prices of which have also been rising in like fashion. Thus, the distress of the non-affluent consumers of such items should be obvious.
The rate of inflation was assessed to be 7.87 per cent in the month of August, above Bangladesh Bank's 6.5 per cent target. Independent and more reliable estimates of inflation are considerably higher at over 10 per cent. The rate of food inflation is considered to be well above the double digits.
The Consumer Association of Bangladesh (CAB) in its last stock-taking assessed that percentage increase of costs of living was well over the double digits in 2010. Food prices that have a way of creating the justification for increasing the prices of other commodities and services have been on the higher side all throughout 2010. Besides, several increases in the charges of power, gas and fuel oil also helped to raise production costs which in turn led to higher prices and charges respectively of products and services. House rent, costs of education, medical charges, etc., also rose notably. The higher price trends and rising costs of living thereof remain unabated .
Two consequences in the main are noted from the rising prices. Firstly, the price escalations have much increased the cost of living of ordinary people. The poor and the extreme poor comprise nearly half of the population. Understandably, price increases tend to have the most unhappy effects on them and this is more the case in the present price rises as prices of mainly common but indispensable consumption items of the poor are rising. Thus, the purchasing power of the poor is getting eroded. If the present conditions of high prices persist, then the poor will be the poorer and poverty's pangs will deepen in the country.
Besides, even in their poor state, the poor, when they are blessed with relatively stable or improved purchasing power, create demand for a large number of goods and services beyond food and other basic things. The production and marketing of these not so essential products then help to create employment and income for people or the economy grows in the process. But with their purchasing power getting badly battered, the poor or the common people are unlikely to demand such non-essential items in good quantities and hence a slump in their production can be expected with sorry consequences of the same on their producers and sellers. Thus, overall deepening of the poverty situation, worsening unemployment and economic stagnation are likely to be the fallout from the unabated price rises of essential products.
All concerned quarters are clanging their bells hard for the government to sit up and hear the noises they are making to give them relief from price rises. But so far, the response of the government has not been proportionate to the outcry. The government must demonstrate its adequate responsiveness to a demand which is central to the needs of people and also in the vital interest of the economy.
It is noteworthy that the ruling party in its election manifesto declared prominently that on going to power they would ensure the keeping of the prices of rice, cooking oil, etc., stable and within the purchasing power of the common people. It was also pledged in the manifesto that highest production of these essentials within the country would be achieved; timely imports of essentials would be carried out and the same would be sold at fair prices; monitoring of the markets would be carried out regularly and effectively; the syndicates engaged in profiteering and hoarding would be smashed; extortion activities eliminated; and an organisation would be created to control prices of essential commodities in the interest of the consumers. But after about two years of taking charge, this government appears to have succeeded little in living up to their election pledges about price control and stabilisation.
There have been some good sides to the economy's management in recent years and the same were discussed appreciatively in the national press such as stable and increasing foreign exchange reserve, better collection of revenues, etc. But common people understandably do not have so much interest in these macro economic indicators. For them, the main concern is the cost of essentials or daily consumables and the charges they have to pay for various regular and unavoidable services. In other words, for common people, the cost of living is a very vital issue and government's creditable activities in other spheres are overshadowed by their concern with the increasing cost of living.
Free market principles in many countries are not meant to be freestyle operation of traders or sellers. Governments in these countries take steps against undue profiteering. But this has not been the case in Bangladesh. The government here is seen as rather motionless as traders increase prices without any justification for the same. Apart from words of advice to traders, the government seems to have no effective strategy in place as prices of goods get most unreasonably increased by substantial margins and the high price lines are retained. The importers of essential goods contend that they are only passing on the higher costs of imported goods to consumers. But this argument may be only partly true. In most cases, they are found to be hiking prices much above the increases in their import costs.
Thus, the tormented consumers in the country expect from the government the fastest taking of measures to give them relief from the price juggernaut which is crushing them.