Price Hike in Bangladesh: An overview of the causes and policies to adjust it.
Why are most of the daily necessities more expensive in Bangladesh without any reasonable reason? This is actually a million dollar question. Unfortunately, no government has investigated the problem and tried to find a suitable answer. Factors such as demand and supply, presence of so-called item-based market syndicates, illegal toll collection at various points, transport costs, oppression of middlemen, lack of an efficient market system and credible statistics of farm production. Commodities, poultry items, and fish have not been considered together in any broad-based market studies by the relevant authorities.
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Rising prices of essential food commodities have a significant impact on food security, particularly on the disadvantaged population of Bangladesh. The current increase in domestic food production costs coupled with higher global prices may lead to food inflation, which may have negative impacts on the poor. When most prices rise, inflation occurs, unless other prices fall too quickly. If inflation is not compensated by nominal increases in income, people become poorer.
What is the price increase in Bangladesh in 2024?
On a monthly basis, consumer prices rose 2.6% in August 2024, the highest in a year, from 2.17% in the previous month. Bangladesh’s annual inflation rate rose to 11.66% in July 2024 from 9.72% in the previous month, a four-month low. At the end of the monsoon, prices of vegetables rise most years, but they begin to fall with the arrival of fresh winter vegetables. At the peak of winter, the supply of vegetables is plentiful and prices come down to reasonable levels. This year was an exception due to natural disasters.
What causes inflation?
Inflation can be caused by a variety of factors, including increases in production costs associated with raw materials, labor, or market disruptions. Higher demand can also lead to inflation, and certain monetary and fiscal policies such as tax cuts or lower interest rates are also potential drivers. Central banks in advanced economies, including the United States Federal Reserve, monitor inflation. If inflation occurs too quickly, it can push the cost of basic necessities out of reach. Inflation can reduce the purchasing power of consumers, devalue the currency and interfere with the ability to save.
Due to which the situation is worsening and people suffer endlessly:
Unscrupulous traders have taken advantage of the rise in oil prices in recent years. A supply order (SO) that allows dealers to buy a certain amount of oil for supply, but the order goes to a third party, causing oil prices to rise above the market price. In such a situation, the oil users, especially the middle class and low income citizens of the country face a major problem, as the go-betweens earn at least Rs 50 for every 37.32 kg of oil sold. The pandemic recovery has triggered inflation around the world that has led to a mismatch between supply and demand, leading to supply chain crises. This has become more visible due to the recent Russia-Ukraine war as oil prices have risen overall in the international market. The Consumers Association of Bangladesh (CAB) president said the war is being dragged out to extract extra profits outside the system. He also mentioned lack of regular monitoring of the market as one of the reasons for this inflation.
Financial devaluation
Monetarists understand that inflation can result from too many dollars chasing too few goods. In other words, the money supply has grown too large. According to this theory, the value of money is subject to the laws of supply and demand like any other good in the market. As supply increases, value decreases. When money depreciates, its purchasing power decreases and things become relatively more expensive. Prices used to increase during Pakistan. The history of buying products at high rates is old. Some unscrupulous traders stockpile some daily essentials and sell them at inflated prices at different times. But once the government used to sell products to common people at fair price through TCB to control the market.
Conclusion
Corruption is not an international crisis. It is an internal issue of Bangladesh. Corruption-prevention or control depends entirely on goodwill. If every department, institution and department wants that they do not commit corruption and do not give opportunity for corruption then there will be no cause for concern. It is the responsibility of the bank-authorities to see whether the loan taken is properly utilized or not. If the bank performs its duties properly, the borrower will not be able to use it for other purposes. Increasing the price of daily necessities on special occasions is not a new thing.