Tackling irrational food price hike

The simple market rule that price of a commodity is dictated by its supply in the market does not usually hold in Bangladesh. This is more so when it comes to the case of foodstuffs. The prices of food commodities in the global market, for instance, saw a marked decline by 13.7 per cent last year compared to its previous year (2022), says the UN's Food and Agriculture Organization (FAO) in a recent report. FAO's cereal price index, in particular, fell by 15.4 per cent thanks to easing of supply concerns caused by Russia-Ukraine war in 2022. However, so far as the Ukraine war's impact on food grains prices is concerned, it was only the cereals (wheat and maize), that first rose in the thick of the war, but later fell following the grain deal with Russia. But another important cereal, rice, did not follow the same pattern as its price soared by 21 per cent due to the effect of the weather phenomenon, El Nino, and India's putting restrictions on rice export. But the vegetable oil price, on the other hand, declined drastically by 32.7 per cent as its exports increased. The fall in edible oil prices had to do with the major vegetable oil producers' cutting down on biofuel production. Overall, the trend in prices, on an average, experienced a considerable decline.
What is plain from all these instances of fluctuation in food prices is that the law of demand and supply has been at work in the global market. But that is not so for Bangladesh. For, rain or shine, here the behaviour of food commodities' prices, to be precise, is to go up. The data on the country's food price trend as provided by the Bangladesh Bureau of Statistics (BBS) also corroborate this view. Notably, the data provided by the BBS last year show that food inflation surged to as high as 15.54 per cent in August from 7.76 per cent in January. On that score, economists are of the view that the average food inflation in 2023 was around 10.06 per cent in Bangladesh. But how to explain this odd trend in food prices in Bangladesh that defies common sense? Well, from the retailers to the wholesalers, they have ready explanations that include depreciation of Bangladesh taka (BDT) against US dollar (USD), fall in forex reserve in the country's central bank, the wars abroad,and so on and so forth. But the fact remains that these are all lame excuses, pure and simple, with no connection whatsoever with the facts on the ground.
Some experts would like to call it a 'sluggishness in adjustment' of prices in the local market in response to the world market. In this connection, consider that though food commodities prices in the international market witnessed a sharp fall by more than 20 per cent between March and June last year, the domestic market responded to it by an unabated price hike. Clearly, this stubborn behaviour of foodstuff prices in the country is not dictated by the market, but by crooks who manipulate prices to suit their selfish ends. It is concerning at a time when according to the global lender, the World Bank (BB), 71 per cent of the country's households hit hard by their eroding incomes are in an ever-losing struggle to make ends meet.
So, what is the answer to this atrocious and arbitrary food price regime of Bangladesh? Needless to say, tackling the unbridled horse of food price hike with an iron-fist should be the utmost priority before the post-election government in the making.