Honey, we shrunk ourselves

Infographic: TBS

Mehedi Hasan had already stopped buying milk, eggs or fruits for his kid, and tightened his groceries' budget to cope with the rising prices of daily essentials. In May, he had to buy less vegetables as no expenses were left to skimp on. 

The three-member family – Mehedi, his wife and son – required Tk8,000 for vegetables and groceries items such as soap, toothpaste and detergent powder, while they had only Tk5,000 for daily essentials.

"I was not in such distress even during the pandemic," said Mehedi, a private firm employee who lives in Dhaka's Rampura area.

Prices of daily essentials have spiralled more than 30% in the last two years, according to his estimation. Prices increased by 20% in May alone, but income did not increase by a single penny. 

Like Mehedi, as many as 67% of households across the country reduced their daily expenses in May due to the spiralling commodity prices, according to a survey report.  

After conducting the survey on 4,000 families across the country, the Power and Participation Research Center (PPRC) and Brac Institute of Governance and Development (BIGD) noted that 38% of households said they needed more money for food items alone. But due to lack of cash, households reduced their food consumption.

"In May, one in five families missed at least one meal per day," stated the survey.  

Hossain Zillur Rahman, executive chairman of the PPRC, said people have cut back on the consumption of fish, meat, milk and fruits – animal and plant-based proteins that help ensure nutritional efficiency.    

"The belt-tightening for food or education is pulling down the standard of living. Besides, businesses that produce and distribute food items and consumer goods are getting hurt," he added.

 Pay more for less

In the wake of raw material price hikes in the international market, food manufacturers and big conglomerates initially tweaked their packaging rather than hiking product prices.

Consumers have been encountering shrinking food and grocery packages over the past several months, although the prices of soap, shampoo, toothpaste and detergents were not hiked.

Shrinking products and charging the same old prices is a hidden form of inflation, often referred to as shrinkflation or downsizing. It is not a new phenomenon, but it tends to become more common during periods of high inflation, such as right now.

Producers and sellers said prices of almost all daily essentials have gone up by 10%-20% in the last one month.

Shopkeepers in different areas of Dhaka said companies reduced the net weight of potato crackers, other chips and chanachur after Eid in the first week of May.

Arif Hossain, a shopkeeper in Dhaka's Farmgate area, said the quantity of chips, chanachur, biscuits and other snacks that were supplied by the companies last week has decreased. But the slack-filled bags are really tricky to spot if customers do not pay attention.

More potatoes, less chicken – a belt-tightening recipe for eateries

One plate of chicken curry in any typical restaurant in Dhaka is at Tk70-Tk90. But the dish nowadays has more potato pieces and less chicken.

The same is the case for beef, though the price of the meat dish has been raised by Tk10-Tk20 per plate. Fish dishes now cost Tk10-Tk15 more than a couple of months ago.        

Each piece of roti or paratha used to cost Tk5 even a month ago at Rabeya Hotel in the capital's Moghbazar. But those are now at Tk10, while the vegetable plate has doubled to Tk20.

Owner of the hotel Rafik Hawlader said he has reduced the amount of rice, fish and meat per plate. The price hike and reduced amount of food have been met with a decreasing number of customers.  

"I had to reduce the amount of food initially to avert the losses. But commodity price hikes last month forced me to raise the prices," he added.

The restaurant owner's other cost cutting measures include cutting an 1kg fish into as many as 16 pieces and making 16 meat plates from 1kg of beef.

Sayedur Rahman, a waiter at Bharta-Bhat Restaurant in Moghbazar, said they used to make 11-12 meat plates from 1 kg beef, and sell per plate at Tk100 per dish. But now the price has jumped to Tk120, while 1kg of beef is cooked to make 15 plates.

Profit margin shrinking too

Amjad Hossain, a shopkeeper in Dhaka's Eskaton, sells consumer products such as soap, shampoo and beauty cream of a leading brand. The company has reduced the retailer's profit margin by 3% from 12% before Eid.

He said commission on other products like noodles, chanachur, bread, pasta, powdered milk, plastic and home appliances is also decreasing.

Amjad said the declining profits were hurting his sales.

"Even two months ago, our commission on home appliances was more than 20%, and we were able to offer discounts to the customers," said an official at the Moghbazar outlet of Walton – one of the leading electronics brands in the company.

Now the commission has been reduced to 5%, he claimed.

No more price camouflaging

Shrinkflation camouflages the price surges in different-looking boxes and bags, and aims at not bothering the customers. But the intensity of the recent price surge leaves no option but to raise the prices for many food manufacturers and consumer product-makers.

Kamruzzaman Kamal, director (marketing) at Pran-RFL Group, said production costs have ticked up by 30%-35% since early-2022, as they have been supplying products by reducing the profit margin for so long. But now there is no other way but to increase the price.  

Pran has already hiked prices of some of its food products.   

Md Shafiqur Rahman Bhuiyan, president of the Bangladesh Auto Biscuits & Bread Manufacturers Association, said though some big companies have increased prices by 10%-12%, their profit margins have dropped significantly.

"Smaller companies first reduced the number of biscuits in the packet to keep the business afloat. Without any other option, now they have increased the bakery item prices by 10%. But the price hike has reduced sales," he added.

Mesbah Uddin, chief marketing officer of Fair Group, said the average price of all raw materials has risen by 30% in the last six months. Operation charges, including freight cost and transport charges, have jumped by at least 23%. But the company did not increase product prices.

"To survive in the long run, our production units are running. But now there is no way but to raise the price," he added.