Friday, 7 October, 2022

Rising cost of living: Low-income people under pressure

The rising costs of living following a fresh hike in prices of essential commodities have dealt a great blow to low and lower-middle income people, who are already bearing the brunt of inflationary pressure stemming from the volatile global commodity market due to the Russia-Ukraine war.

The people with limited income are now struggling to cope with the increased costs of living as most of them have not seen any salary hike since the outbreak of the coronavirus pandemic nearly three and half years back.     

Immediately after the recent hike in fuel prices, the transport cost saw a big jump, fuelling a fresh hike in commodity prices that have remained volatile in recent months.

The increased fuel price also pushed up agricultural production cost which directly affects the price of staple food rice in the local market.

As a result, a large section of low-income people have been compelled to borrow money from different sources or break their savings to meet the increased cost of living.

Economic analysts fear that the situation will widen the disparity between the rich and the poor further, which will be a major concern for economic inclusion.

“Even though the economy witnessed a certain level of recovery from the coronavirus pandemic, the soaring inflation has shrunk people’s income and savings,” former lead economist of the World Bank in Dhaka Dr Zahid Hussain said.

Finance Minister AHM Mustafa Kamal also admitted that the increased fuel price will shoot up inflation according to the rules of economy.

He also said the move will mount the sufferings of the limited-income people though he expressed the hope that they will be able to overcome the crisis soon.

People have to spend more than their income, which is compelling them to take loans from different sources to meet the deficit, Dr Zahid explained.

He also warned that the situation may fuel a growing income inequality in the country.

Inflation hit nine-year high at 7.56 percent in June before slightly easing to 7.48 percent in July.

After the Russia-Ukraine war broke out in late February, inflation surged to 7.42 percent in March which was 5.47 percent a year earlier.

Some economic analysts, however, refuse to accept this inflation figure of state agency Bangladesh Bureau of Statistics (BBS), saying the actual inflation in the country is much higher.

The prices of essential commodities like rice, edible oil, pulse, flour, sugar, egg, onion, spices and essential consumer goods are going up in the local market almost every day.

Apart from global hike in food and energy prices and the fresh adjustment to local price of fuel, market manipulation by unscrupulous businessmen is also blamed for the volatile commodity market.

After the fuel price hike, the price of rice has shot up by Tk 300-1,000 per 50 kg, according to rice traders in the capital. Truck fare increased by nearly Tk 6,000 after the fuel price adjustment.

The price per dozen eggs has skyrocketed to Tk 150 from Tk 115-120 few days earlier while broiler chicken price jumped to Tk 200-210 per kg in the city from Tk 155-160 a week earlier. 

Most vegetables are retailing at Tk 60-100 per kg with green chilli’s price hitting as high as Tk 320 per kg. 

Besides, increased transport cost has been a major concern for the country’s people who have to use mass transport.

The transport cost had already seen a hike after the diesel price rose by Tk 25 to Tk 80 a litre in November last. But after the fresh hike by Tk 34 to Tk 114 per litre, transport owners are allegedly charging 1.5-2 times higher fare.

Bangladesh economy is currently facing the biggest challenge from the external sector as imports grew much faster than exports, while remittance fell in the last fiscal year.

As a result, US dollar in the open market hit a record high at Tk 120, which is a major source of imported inflation.

President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Md Jashim Uddin said: “The Russia-Ukraine war has reversed all the calculations at a time when the world was returning to normal from the Covid crisis.”

As a result, the global commodity market has gone beyond people’s reach, he said, adding that the fuel price hike coupled with container crisis has aggravated the problem.

Noted economist Dr Debapriya Bhattacharya suggested leaving the exchange rate on the market and advised the government to withdraw the cash incentive on inward remittance.

He also recommended transferring allowance money directly to the most-affected people while expanding the social safety net to protect the poor.

The economic analysts and the business leaders said it is urgent to lower commodity prices to give people a relief.