This crisis is rooted in soaring demand for energy as the economic recovery from the pandemic takes hold
The rise in global fuel prices is leading to price hikes of essentials in the country, say businesses and economists.
“The poor, new-poor, and people with fixed incomes will bear the brunt of the global fuel price hike as this will push up transportation costs, electricity production costs, labour costs, and of course, food costs,” said Muhammad Shahadat Hossain Siddiquee, professor of Economics at the University of Dhaka.
“The spectrum of impact is very wide as oil is integrated with every sphere of life,” he said, adding that as the prices of essential commodities go up, fixed-income groups will push for higher wages.
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Siddiquee also noted that the manufacturing and export industries will also be hampered.
Brent crude was up 24 cents or 0.3% at $83.89 a barrel at 0810 GMT. On Monday, it reached $84.60, its highest since October 2018. US oil gained 21 cents or 0.3% to $80.73 and on Monday hit $82.18, its highest since late 2014, reports Reuters.
This crisis is rooted in soaring demand for energy as the economic recovery from the pandemic takes hold.
Businesses say the prices of essentials are rising due to rising transport costs for import-dependent goods.
If the price of oil does not drop, the price of these products is unlikely to go down, they added.
Afzal Hossain, a grocer at Hatirpool wet market said the price of edible oil has been on the rise due to this issue, along with the prices of sugar, flour and onions.
SM Nazer Hossain, vice-president of Consumer Association of Bangladesh (CAB), said: “The global fuel price will also affect the poor, especially those who lost jobs and businesses amid the pandemic.”
Covid-19 has already pushed up the prices of commodities, now the fuel price hike will just add to it, he said.
Mahtab Uddin, an economic researcher at Bangladesh Economic Association (BEA), said: “Amid the pandemic oil production slowed down, now fuel demand has increased. The oil producers now increased the prices. Developing countries will suffer in the long term.”
When garment workers and transporters will demand wage hikes due to the price hike of commodities, it may create tension in the economy, he added.
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So, the government should control prices to protect the economy, he further said.
Commerce Minister Tipu Munshi told Bangla Tribune that no one can stop the influence of the international market — the effects will be felt in the domestic markets too.
However, the prices of daily necessities will definitely fall within the purchasing power general people, he added.
Earlier, the Commerce Ministry had sent a letter to the NBR on the withdrawal and reduction of tariffs to keep the prices of daily commodities, especially imported goods, in check.