Originally posted in Daily Sun on 13 September 2023
Poor market management blamed for soaring food inflation
Soaring food inflation rates in the country have been attributed to poor market management and the profit-seeking behaviours of certain businessmen in syndicates.
Food inflation rates have reached concerning new heights, according to the latest data from the Bangladesh Bureau of Statistics (BBS).
Experts attribute the sharp rise to poor market management systems and the avaricious tendencies of some businessmen who operate through syndicates.
BBS revealed that food inflation soared to an astounding 12.54 percent in August 2023, up from 9.76 percent in July of the same year. This represents a significant increase compared to the rates from the previous year, which stood at 9.94 percent in August 2022 and 8.19 percent in July 2022.
The country’s dependence on imported food commodities has also compounded the issue. Essential items such as onions, garlic, ginger, lentils, sugar, edible oil, green chilli, and cumin are mostly imported. Recent data from the Trading Corporation of Bangladesh showed drastic price hikes in just the past month. For instance, the price of local onions has risen by 36 percent, and imported onions increased by 64 percent. Likewise, the price of local garlic increased by 15 percent, and imported garlic rose by 12 percent. Local and imported ginger saw a price increase of 16 percent and 19 percent respectively, and even the price of eggs jumped by 5 percent.
Alarmingly, this inflation comes at a time when international market prices for these commodities have actually declined. Critics argue that the discrepancy in retail pricing within Bangladesh compared to the international market is due to the profit-seeking behaviours of local businessmen.
Dr Khondaker Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD), called out the government’s inadequate market regulation efforts.
According to him, the laxity displayed by the government in this critical economic matter could make it exceedingly challenging to control the market in the future.
He noted that while there are some market-based factors contributing to the high food inflation, such as the increasing cost of imports due to the devaluation of the taka against the dollar, there are also internal non-market-based factors at play. These include the unethical practice of hoarding essential commodities and the lack of proper government oversight.
In addition to market factors, Dr Khondaker Golam Moazzem also highlighted non-market-based factors affecting food inflation.
He pointed out that the unethical practice of hoarding essential commodities and not supplying them properly to the market is a serious issue.
Government agencies, including the Directorate of National Consumer Rights Protection (DNCRP) and the Competition Commission, have shown little initiative in supervising these matters. Moreover, he expressed concerns about whether the government would be willing to address these issues in light of the upcoming elections.
Dr Jahangir Alam Khan, an agro-economist and researcher, told the Daily Sun that the primary reason for the soaring food prices is the country’s high dependency on imported food commodities.
According to him, apart from rice, nearly all food commodities are import-dependent.
“Businessmen have increased the prices of these food commodities in comparison to the price hikes in the international market. If the price of one essential increases in Bangladesh, it is unlikely to decline easily,” he stated. As a result, food inflation in Bangladesh has escalated at a higher rate than in the international market and shows no signs of receding.
Dr Khan also emphasised that rising inflation rates lead to consumer frustration and exacerbate food and malnutrition crises among the poor.
He suggested that the government should step up its food assistance programmes to mitigate the impact of soaring prices. Moreover, open market sale of essential commodities through the Trading Corporation of Bangladesh (TCB) and bolstering local production could also serve as effective countermeasures against escalating food inflation.