Time to take a hard look at the price situation
Monday, 21 December 2009
Shamsul Huq Zahid
The inflationary pressure on the economy after easing in recent months is showing a few signs of getting strong again.
The World Bank has already cautioned about the inflationary buildup because of a number of factors, including the presence of substantial amount of excess liquidity in the market.
According to the central bank statistics, the hike in the prices of food items has been contributing more than the non-food items to the rise in inflation in recent months.
The prices of most food items have been on the rise in recent weeks, with the prices of some essentials recording a phenomenal increase. The prices of food grains such as rice, wheat, edible oils, pulses, onion and garlic have gone up substantially in the last couple of weeks.
Surprisingly, the prices of rice have gone up by Tk 2.0 to Tk.3.0 a kg when the newly harvested aman rice has started arriving in the market. Similarly, the edible oil prices have been increasing almost everyday for unexplained reasons. The prices of lentil and garlic have reached record levels. The prices of winter vegetables are quite high compared to that of the previous years.
The government until now has preferred to remain an onlooker. The traders, apparently, are enjoying total freedom to fix their prices, may it be at the wholesale or retail levels. However, one cannot expect any positive outcome from the government intervention made with the objective of keeping the prices of essentials at an affordable level.
The government, the commerce ministry in particular, could not make any headway when it intervened to stabilize the prices during the last Ramadan. Some government leaders talked tall, held series of meetings with business leaders, importers and traders of essentials and created price-monitoring committees to this end. But no tangible outcome could be achieved.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) also got involved in price monitoring during the month of Ramadan. But it made itself an object of ridicule because of its failure to make any positive contribution to the efforts for controlling prices of essentials.
The government talked about engaging the state-owned Trading Corporation of Bangladesh (TCB) in making available some essential items to the consumers at fair prices. But the moribund TCB failed utterly in carrying out the job.
The media, print or electronic, are yet to pay their attention to the current price trend of essentials. But the fact remains that common men are getting the heat of the soaring prices of essentials.
Media reports have time and again have pointed out the unreasonable gap in prices of a good number of essentials at the import and retail levels. There is no denying that most imported or locally produced food items reach the retail level through the involvement of some middlemen. But that does not justify the prices demanded by the retailers.
Moreover, the government loses a substantial amount of revenue every year since many imported essentials do enjoy duty-waiver, fully or partially. The duty waivers are given with the objective of benefiting the consumers. But the benefit is hardly made available to the consumers.
In a deregulated economy, the government cannot way dictate the prices of commodities. And, at the same time, it cannot ignore the need of protecting the interest of the consumers, may it be price or product quality.
But the authorities concerned, at least, should create a situation where the traders are forced to exercise restraint voluntarily. For instance, the government can monitor the prices of essential commodities in the international market, calculate the costs of the same at the importers' level and publicise the import costs of different essentials through the media continuously. This would create some pressure on the businesses to maintain some sanity as far as prices are concerned.
Actually, the people involved in the import and trading of essential items belong to a different class. They are not as enlightened as the people engaged in other businesses. A visit to Khatunganj of Chittagong or Maulavi Bazar of old Dhaka would substantiate that fact. This particular class of traders is sticking to the old way of doing business. And the chamber bodies do not have much influence over them.
Whatever may be the difficulties to rein in the rogue and profit-hungry importers and traders of essential items, at the end of the day, the government would have to face the angry consumers.
So it is high time the government puts a leash on the rising prices. It should do the job without much publicity.
For instance, the commerce ministry should ask the edible oil refiners and bottlers to explain the reason for sudden hike in prices of their commodities. The government can analyse the practicality of the reason/s and do what the situation demand. Such steps can be replicated in the case of other items. The government must show that it is constantly alive to the problems of higher commodity prices.
The inflationary pressure on the economy after easing in recent months is showing a few signs of getting strong again.
The World Bank has already cautioned about the inflationary buildup because of a number of factors, including the presence of substantial amount of excess liquidity in the market.
According to the central bank statistics, the hike in the prices of food items has been contributing more than the non-food items to the rise in inflation in recent months.
The prices of most food items have been on the rise in recent weeks, with the prices of some essentials recording a phenomenal increase. The prices of food grains such as rice, wheat, edible oils, pulses, onion and garlic have gone up substantially in the last couple of weeks.
Surprisingly, the prices of rice have gone up by Tk 2.0 to Tk.3.0 a kg when the newly harvested aman rice has started arriving in the market. Similarly, the edible oil prices have been increasing almost everyday for unexplained reasons. The prices of lentil and garlic have reached record levels. The prices of winter vegetables are quite high compared to that of the previous years.
The government until now has preferred to remain an onlooker. The traders, apparently, are enjoying total freedom to fix their prices, may it be at the wholesale or retail levels. However, one cannot expect any positive outcome from the government intervention made with the objective of keeping the prices of essentials at an affordable level.
The government, the commerce ministry in particular, could not make any headway when it intervened to stabilize the prices during the last Ramadan. Some government leaders talked tall, held series of meetings with business leaders, importers and traders of essentials and created price-monitoring committees to this end. But no tangible outcome could be achieved.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) also got involved in price monitoring during the month of Ramadan. But it made itself an object of ridicule because of its failure to make any positive contribution to the efforts for controlling prices of essentials.
The government talked about engaging the state-owned Trading Corporation of Bangladesh (TCB) in making available some essential items to the consumers at fair prices. But the moribund TCB failed utterly in carrying out the job.
The media, print or electronic, are yet to pay their attention to the current price trend of essentials. But the fact remains that common men are getting the heat of the soaring prices of essentials.
Media reports have time and again have pointed out the unreasonable gap in prices of a good number of essentials at the import and retail levels. There is no denying that most imported or locally produced food items reach the retail level through the involvement of some middlemen. But that does not justify the prices demanded by the retailers.
Moreover, the government loses a substantial amount of revenue every year since many imported essentials do enjoy duty-waiver, fully or partially. The duty waivers are given with the objective of benefiting the consumers. But the benefit is hardly made available to the consumers.
In a deregulated economy, the government cannot way dictate the prices of commodities. And, at the same time, it cannot ignore the need of protecting the interest of the consumers, may it be price or product quality.
But the authorities concerned, at least, should create a situation where the traders are forced to exercise restraint voluntarily. For instance, the government can monitor the prices of essential commodities in the international market, calculate the costs of the same at the importers' level and publicise the import costs of different essentials through the media continuously. This would create some pressure on the businesses to maintain some sanity as far as prices are concerned.
Actually, the people involved in the import and trading of essential items belong to a different class. They are not as enlightened as the people engaged in other businesses. A visit to Khatunganj of Chittagong or Maulavi Bazar of old Dhaka would substantiate that fact. This particular class of traders is sticking to the old way of doing business. And the chamber bodies do not have much influence over them.
Whatever may be the difficulties to rein in the rogue and profit-hungry importers and traders of essential items, at the end of the day, the government would have to face the angry consumers.
So it is high time the government puts a leash on the rising prices. It should do the job without much publicity.
For instance, the commerce ministry should ask the edible oil refiners and bottlers to explain the reason for sudden hike in prices of their commodities. The government can analyse the practicality of the reason/s and do what the situation demand. Such steps can be replicated in the case of other items. The government must show that it is constantly alive to the problems of higher commodity prices.