Another oil shock awaits already squeezed people
Price shocks follow people like a nightmare as soybean oil is all set for another price hike
While prices of everything from footpath snacks to air-conditioners are surging causing shockwaves to people's cost of living, soybean oil refiners propose another hike – Tk24 per litre.
They submitted the proposal to the commerce ministry on Wednesday, seeking bottled soybean to be at Tk222 per litre. The ministry may sit with the refiners Monday to finalise the rate, as commerce ministry officials hint at raising the price by at least Tk5-6.
Analysing the cooking oil rates in May, they said palm oil prices may drop by Tk8-Tk10 per litre. Besides, soybean oil prices too may reduce a bit in July.
"We will adjust the rates based on oil prices in May," Commerce Minister Tipu Munshi told journalists Thursday.
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Prices of daily essentials have been soaring globally following Russia's invasion of Ukraine in the last week of February. The prices of non-brand bread at footpath tea stalls – which is usually consumed by the low-income people as snacks – rose by 50%, as branded bakery items have also become costlier.
International supply shocks, coupled with a taka devaluation against the US Dollar, have compounded the situation. Food staple rice prices jump record high even amid the peak paddy harvesting season, while state-owned milk and dairy producer Milk Vita comes up with price hikes.
The Trading Corporation of Bangladesh – the state-owned agency that monitors the commodity market – Thursday said of the 62 items in the consumption basket, prices of 58 items have spiralled in one month in retail.
Prices of coriander, bay leaf, cinnamon and grams dropped slightly during the time, according to the corporation, though none of them is a daily essential. Amid the price shocks all around, the Energy Regulatory Commission Thursday proposed reducing liquefied petroleum gas prices.
According to the government estimate, April inflation was 6.22%. Economists and researchers, however, questioned the estimation by claiming that the rate of inflation is not less than 12%.
The food price shocks are so intense that even the transport sector people have raised their fares. They argue that if they cannot earn a bit more now, they would have to starve.
Almost nothing left for skimping anymore
Rahenur Rahman, a private employee in the capital, used to spend Tk9,000 for food and non-food items such as soap, shampoo and toothpaste.
Rahenur said he had to spend Tk12,000 for his five-member family only for food in May. "How would we survive as the income remains the same," he questioned.
Another Dhaka dweller Shafiqul Islam said he now needs Tk700-Tk800 only for baby milk. Shafiqul's four-member family had Tk6,000 for food per month, while the spending in May surpassed Tk8,000.
"It is getting tougher to manage three meals a day for my family with my limited income," added Shafiqul.
Earlier on 5 May, soybean prices were increased by a record Tk45 per litre to Tk198, while loose oil was raised to Tk180 and palm oil Tk172.
The government withdrew value-added taxes on multiple stages of cooking oils except 5% on import. The special treatment is set to expire on 30 June.
Mahmudul Hasan, deputy chief of the Bangladesh Trade and Tariff Commission, told The Business Standard that they will seek the revenue board to continue the facility in the next fiscal year.
Bakers go for shrinkflation
Bakers have been reducing the size of breads, biscuits and other items since March due to rising wheat prices in the international market triggered by the Russia-Ukraine war. India's ban on wheat export in May compounded the wheat crunch further.
Bangladesh Bread, Biscuit and Confectionery Manufacturers Association has officially announced to sell all kinds of bakery products at increased rates from 1 June.
According to the new prices for the non-brand bakery items, a 60 grams bun, butter bun, honey bun and patties has been increased to Tk15 from previous Tk10. The price of 70 grams bread has been increased from Tk10 to Tk15.
However, the price of branded bread weighing 250 grams has been increased from Tk35 to Tk40 a month ago.
State-owned milk and dairy product manufacturer Milk Vita Thursday increased the price of milk by Tk5 per litre. The company also increased the prices of all types of dairy products.
Aarong, a private milk and dairy producer, has increased the price of milk by Tk10 per litre a couple of weeks ago.
Consumers now have to spend Tk68-75 for premium rice, which was between Tk62 to Tk70 in March. Coarse rice is at Tk50-Tk52 per kg from previous Tk45.
Before the war, non-brand flour was at Tk34-36 per kg, which is now at Tk46. However, brand-flour is at Tk50 per kg.
Pay more for proteins
While the prices of imported goods were rising due to the war, prices of locally produced broiler chickens and eggs also rose. Four eggs are now at Tk40-45 after increasing by Tk10 in just one month.
Beef rose to Tk750 from Tk650 per kg ahead of Eid-ul-Fitr, which is now at Tk700.
The prices of lentils – often called the protein for the poor – and potatoes have also gone up. As a result, low-income people cannot eat rice with mashed potatoes and lentils without spending more than before.
Lentil price has gone up by Tk15-Tk20 per kg to Tk130-140, while potato has almost doubled to Tk30 per kg.
In the meanwhile, onion prices have soared to Tk40-Tk45 per kg from usual Tk25.
Home appliances hurt too
Prices of refrigerators, washing machines, air conditioners have soared by 10-12% in several phases over in the last six months.
Companies have tried their level best not to raise prices, but they have no other option because of rising prices of raw materials at sources, soaring sea freight charges, and rising US dollar prices. Importers of commercial vehicles, cars, and two-wheelers are also facing the same challenges.
AKM Fazlul Haque, sales manager at the Singer outlet in the capital's Shawrapara, told TBS thaty larger and heavier products, including refrigerators, washing machines, ACs, are causing companies to pay more in freight charges, while smaller premium products, such as consumer electronics, are costing much more in import phases due to higher dollar prices nowadays.
Rabiul Islam Milton, deputy executive director at Walton, said Walton has hiked prices of TV in the last six months.
"We tried not to increase prices of low-budget products much so that it does not hurt common people. But we had to increase prices of premium category products amid soaring production costs," he noted.
On average, Walton refrigerators and ACs registered a 10-12% hike in prices, he added.
Ghulam Rahman, president of the Consumers Association of Bangladesh, said private sector job holders have found themselves in a deep crisis because of a rising cost burden as their income has not risen in line with the increases.
