Consumers in a double whammy

Dhaka's Modhubag dweller Shafiqul Islam used to work for a private firm. When it downsized, he lost his job and remained unemployed for four months. During this period, Shafiqul borrowed from his friends and relatives to make ends meet.

Though he has recently started a new job, at a lower salary than before, Shafiqul said his struggles to make a living were getting more and more acute by the day with soaring food prices.   

Spiking food prices have dealt a major blow to consumers like him at a time when many have lost their jobs, while others have seen a fall in income owing to the Covid-19 pandemic.

Rising food prices are still pushing up the living costs, making it increasingly difficult for people to manage three meals a day.       

According to the Consumers Association of Bangladesh (CAB), soaring prices of vegetables, rice, oil, spices and eggs impacted people the most between May and September. According to CAB's market monitoring data, prices of those items spiked on a regular basis.    

Consumer spending on vegetables rose by 5.39% in the five months, says CAB. According to the Association, prices of vegetables topped the list of price increases.

At Dhaka kitchen markets, the price of leafy greens hovers around Tk20-30 per bundle, compared to Tk6-15 from before the pandemic. Prices of other vegetables have also skyrocketed. Potatoes usually range between Tk20 to Tk30 per kg, which has now surged to the record highest of Tk50-55.

Now, there are hardly any vegetables available below Tk60.    

Traders say the pandemic has completely disrupted the supply chain, while multiple flooding has damaged the vegetables. The inundation has significantly decreased vegetable production. According to estimations from the Agriculture Ministry, floods damaged at least 5% of the summer vegetables.

Mostafa Kamal, a wholesaler in Dhaka's Karwanbazar, told The Business Standard that the damage to vegetables by the floods is yet to be recovered; market demand far exceeds the supply, prompting the price hikes.

He said neither the supply nor the prices will normalize until winter vegetables arrive at the market.

Last week, the Bangladesh Bureau of Statistics (BBS) said that food inflation has jumped by 0.42 percentage points, standing at 6.50% in September, compared to 6.08% in August.

The rising food prices pushed overall inflation in September to 5.97%, which was 0.29 percentage points higher than August levels.

According to CAB, says rice prices showed the maximum increase after vegetables. Although the prices remained stable during the Boro season in May, consumer spending on rice rose by 6% in June. Prices of this food staple fell slightly in July as low-income groups received relief materials including rice. However, rates went up again in August and September.   

Now one has to spend Tk58-60 to buy a kg of miniket rice (fine quality rice) in retail. At Tk 48-50 per kg, the price of coarse rice has increased the most. According to market analysis conducted by the Trading Corporation of Bangladesh (TCB), coarse rice price is nearly 40% higher than the same period last year.

When contacted, Md Layek Ali, general secretary of the Bangladesh Auto Major and Husking Mill Owners Association, said, "Production costs of the millers are rising due to the high prices of paddy. As a result, the price of rice has gone up."

After the virus outbreak in the country, though ginger prices registered the first hike among spices, onion prices have contributed the most to the rising living costs. Prices of the bulb have spiked since India banned onion exports.

According to CAB, consumer spending on spices increased by 10.60% during the August-September period. Onions are now at Tk90-100, while green chillis are at Tk240-260 per kg.

The Bangladesh Trade and Tariff Commission says the country had stockpiles of nearly 5.50 lakh tonnes of onions until September, which were sufficient to meet local demand for two-and-a-half months. Importers started exploring alternative sources of onion soon after the Indian ban. The government has also embarked on several initiatives to cap the rising prices.

However, the cooking staple still remains dear despite all efforts.

Meanwhile, traders raised edible oil prices saying that the international edible oil market had spiked. Edible oil had seen a gradual rise in the last two months.   

According to CAB, consumer spending on edible oil rose by 2.64%. One liter of bottled soybean oil is priced at Tk115-120, while loose oil is also above Tk100 per liter. TCB says palm oil market has become most unstable, as palm oil prices are about 33% higher than the same period last year.

Lentil and eggs are said to be the main sources of protein for people in low-income groups. But prices of both items are also high.

Consumer spending on eggs increased in May, June and August. It decreased slightly in July, but price is still high. One dozen eggs now costs Tk115-120.

CAB President Ghulam Rahman said, "Consumers' spending capacity has decreased due to the pandemic, while flooding has reduced the supply of goods. This has increased food prices, putting consumers in a squeeze. '

He said the government should take immediate measures to ensure increased supply and to cap the rising market prices.