Printing money, not ‘syndicates’, drove up egg and chicken prices

The previous government repeatedly accused poultry companies of manipulating the prices of eggs and chicken. What really happened?

First, the cost of feed rose sharply after Russia invaded Ukraine. The prices of imported feed ingredients increased. This supply shock was beyond the control of the poultry industry, and also beyond the control of the government.

Second, the Taka depreciated significantly against the US dollar, falling from around Tk86 to about Tk120. This depreciation was largely driven by the previous government's irresponsible economic policies.

Economists expect inflation whenever money supply increases too fast. Money supply is the sum of cash in circulation and bank deposits. Bangladesh Bank statistics show that money supply grew rapidly during the tenure of the last government. The most widely used measure of money supply, M2 or "broad money", increased from Tk13.7 lakh crore in June 2020 to Tk18.9 lakh crore in June 2023. In just three years, money supply grew by roughly Tk5.2 lakh crore. That is enough money to pay for 16 Padma bridges.

Money supply grew rapidly because of two policy choices. First, banks were compelled to lend at artificially low interest rates. Second, the previous government maintained a large fiscal deficit, with expenditure far exceeding tax collection. Economists agree that the combination of low interest rates and sustained fiscal deficits fuels money supply growth and inflation. Such policies are colloquially referred to as to "printing money".

The previous government did not want to admit that it had caused inflation by printing money. It blamed imaginary "syndicates" (cartels) for inflation. The Competition Commission accused several poultry companies of manipulating the prices of eggs and chicken.  These allegations were baseless; the government was simply looking for a scapegoat.

The structure of the poultry industry makes it impossible for any cartel to control the markets for chicken and eggs. Thousands of farmers sell eggs and chicken every day. Any market with thousands of sellers is competitive.  Any seller who asks for a higher price than other sellers in his neighbourhood  will have difficulty selling his product. In competitive markets, prices fluctuate in response to supply and demand. It is not possible for thousands of sellers to agree to sell at a high price.

Egg prices typically fall in winter, when consumers eat more winter vegetables, reducing the demand for eggs. Egg prices tend to rise in summer, when hens naturally lay fewer eggs, reducing supply. Volatility is a normal feature of agricultural production. In 2025, egg prices were low in March, June, July, November and December. Egg producers made losses for most of 2025 (and are still making losses). If the price were controlled by a cartel, why would the cartel allow such a low price? Obviously there is no cartel.

The Competition Commission should have hired an economist to study the poultry industry before jumping to the conclusion that price increases were caused by manipulation. Price increases alone do not constitute evidence of price manipulation.

The right economic policies can prevent further inflation.  Interest rates (bank lending rates) must be high whenever the government maintains a large fiscal deficit. The combination of low interest rates and a large fiscal deficit will always cause inflation. The Interim Government (to its credit) halted the depreciation of the Taka by raising interest rates. Bangladesh desperately needs an independent central bank, which must be tasked with controlling inflation and auditing banks (to prevent further fraudulent lending to those in power). 

One hopes that future governments will not try to blame private companies for inflation. Inflation is never the fault of private companies; it is always the result of irresponsible macroeconomic policy.

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