Why are commodity prices still rising?

The lower and middle-class are greatly affected by the rising commodity price

Rasheda Begum lives in a single income household, where her husband works in a private company. 

Although the price of commodities has skyrocketed, his salary has not. Not having enough to pay for basic necessities is now a big concern in her family. 

“In the past one year, the prices of almost all essential commodities have gone up abnormally. We have to spend from our savings and now it has become impossible to leave some money for new savings,” she added.

She also said that now, the situation is so bad that even if they get sick, they can’t afford to go to a doctor. 

“Where living is difficult, the medical expenses are a kind of luxury,” she added.

According to the government agency Bangladesh Bureau of Statistics (BBS), the average income of the people of the country has increased.

But for Rasheda Begum the reality is the opposite. Their income has stagnated. 

While visiting some wet markets in Dhaka, the price of essentials were astronomically high. 

The prices of rice, flour, edible oil, lentils, pulses, onion, garlic, turmeric, flour, milk, sugar, salt, eggs and other essentials have increased significantly.

Despite being the peak season for winter vegetables, they too are being sold at off season prices. 

The price of vegetables is also quite high this time as compared to the earlier winters. Sellers are blaming the unusual increase in the price of diesel, which has led to increased transportation costs.

The price of locally grown onions is currently Tk35 and the imported ones are priced at Tk50. The price of green chili is Tk70-80. Surprisingly, the prices of chili remain higher in the morning and drop a little by the evening.   

The price of coarse rice is Tk48 per kg, whereas the premium rice is sold at Tk60-68, which is still out of the reach of the lower and middle class. 

There is no way to eat flat bread instead of rice, loose atta (flour) is sold at Tk36 per kg, unchanged from the last week, whereas packed atta at Tk45 per kg, remained unchanged leaving immeasurable sufferings for the poor. 

The price of eggs, the cheapest source of animal protein for low-income groups, is Tk 37-Tk38 for a hali or four pieces.

The price of bottled soybean oil has been increased from Tk160 to Tk168 per litre and the unbottled soybean price rose by Tk7 to Tk143. Prices of a five-litre bottle have gone up Tk35 to Tk795.

However, according to Business Insider, the price of soybean oil at the international market at $1.46 or Tk125.55 per litre. 

At the same time, the price of palm oil was hiked by Tk15 to Tk133 per litre in the local market.

Beef is being sold at Tk620 per kg, where mutton Tk880-Tk900 per kg, poultry chicken Tk145-Tk150 per kg, and the native chicken is sold at Tk420-Tk450 per kg.

White sugar is sold at Tk75 per kg and brown sugar is sold at Tk90-Tk100 per kg. Cylinder gas is sold at Tk1,400.  

While visiting the Shah Ali kitchen market of Mirpur area, it was seen that the winter vegetables including cabbage, cauliflower, carrot, tomato, bean etc are being sold at higher prices than last winter.

Ripon Hossain, owner of a tea stall, said that the price of sugar has increased to Tk75-Tk90, condensed milk Tk80, gas cylinder Tk1,400. So, they are unable to sell a cup of tea for Tk5, and now take Tk7 instead.

According to recent data, the economy faced 6.05% of inflation in December, when the wage rate index increased by 6.11%. 

The purchasing power or real income of millions of people have fallen as the wage increase is very little higher than the inflation rate. 

Hasan Mahmud, a well-paid executive of a private firm, said that the BBS statistics may be true but not for more than 90% of people in the country. 

“Every day, I see new worries and tensions as the grocery bills hit new heights. Very few people in the country are doing well now,” he added.

Earlier, Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office said that the inflation in December was 6.05%, while wage growth was 6.11%. This means that even though wages have risen, inflation has risen too. 

On the other hand, there is talk of GDP growth, with which per capita income has gone up. “But now the question is, where is this growth going?” he asked.

“Even if the BBS data is correct, there is no benefit to the increase in overall wages because it is going to be cancelled out by inflation,” Hussain added.