Business Desk

The Bangladesh Institute of Social Research (BISR) Trust organized a special seminar on Sunday titled “Price Hike in Bangladesh: Trend, Drivers, and Possible Ways to Combat” at its Lalmatia office in Dhaka on Sunday.

The seminar aimed to provide an in-depth analysis of the escalating inflation in Bangladesh, the reasons behind commodity price hike, and effective strategies to address these challenges.

The seminar was moderated by Dr. M. Khurshed Alam, Chairman of BISR Trust, with a research-based keynote presentation by Dr. Badrun Nessa Ahmed, Research Fellow at the Bangladesh Institute of Development Studies (BIDS).

Dr. Badrun Nessa noted that inflation in Bangladesh, traditionally 5-6%, has surged to 9-10% in the past two years. Food inflation, particularly in rural areas, has outpaced non-food inflation. In November 2024, the general inflation rate hit 11.38%, primarily driven by rising food prices.

Price hike have pushed approximately 500,000 people into extreme poverty and 840,000 into moderate poverty (World Bank, 2023 & 2024). Consumption of protein-rich foods has decreased, while rice consumption has risen, particularly in rural areas. Even the middle and upper-middle classes are feeling the strain of rising essential goods prices, she added.

Dr. Badrun Nessa emphasized that signaling of price that may increase is especially influential in Bangladesh. Any indication of a potential price increase prompts collective price hikes by traders, exacerbating the problem.

Global factors like the Russia-Ukraine war, dollar appreciation, and disruptions in global supply chains; domestic issues such as crop losses due to floods, inefficient market management, and monopolistic market practices; inadequate market monitoring further aggravates the situation, she furthered.

Dr. Badrun Nessa proposed several policy measures including, enhancing food production and supply chain management to increase availability, expanding government’s safety programs, such as open market sales (OMS) and subsidized food distribution; improving market management and addressing supply chain inefficiencies; preventing monopolistic activities and ensuring fair competition.

Strengthening the Bangladesh Competition Commission to curb market monopolies and manipulations may be another solution as she suggested.

Md. Aynul Islam, General Secretary of the Bangladesh Economic Association, argued that reducing budget deficits and curbing corruption are essential to controlling price hikes. He pointed out that corruption in different projects is funneling wealth into the hands of a few, disrupting income equality. Introducing dearness allowances might further imbalance the economy, benefiting around 1.4 million public servants’ 7-8 million family members while leaving others worse off.

Dr. Aynul proposed forming a “Price Commission” to transparently calculate the total cost of delivering goods from production sites to Dhaka.

Representative of the traders, Lutfor Rahman Babul stated that large companies buy high-demand products in bulk amount at higher prices from producers’ end. These companies’ pricing decisions heavily influence retail prices, ultimately impacting consumers.

Addressing Myths and Realities :

Dr. Khurshed Alam remarked that transport extortion is often blamed for price hikes. However, he argued that field-level extortion costs less than 50 paisa per kilogram of goods. Factors like monopolistic sales, excessive buying to maintain social status, and buyers’ excessive purchasing power significantly influence price hike.

He furthered that to build a house, at least Tk 1.5 million are required for extortion payments, while for goods-carrying trucks, a mere Tk 200 is charged depending on the area. These two types of extortion cannot be compared. However, traders have been successful in using the pretext of extortion to present a compelling justification for price hikes, which has been largely accepted by the general people. Moreover, those responsible for overseeing trade management also see this as an issue for the police to handle.

Dr. Alam further criticized the lack of a genuinely competitive market, stating that monopolistic practices and uninformed consumer behaviors embolden sellers to maintain high prices. Once prices rise, they rarely decrease.

The seminar highlighted the importance of implementing effective policies to stabilize prices, protect vulnerable populations, and foster a competitive and equitable market environment. Continuous market monitoring mechanisms must be established to address these challenges effectively.