Price rise is a phenomenon every economy has to experience but its effects vary greatly from country to country, especially when looked at from the consumer's point of view. True, in some cases the extra amount the consumer has to pay is offset by his extra earnings, which may be even higher to his gratification, but the overwhelming majority of the consumers in Bangladesh fail to earn enough to match the increase in price. Cuts in expenditure are entailed as a result, which in turn starts the process of 'shrinking lifestyle' affecting businesspeople as well in its wake.
What is however a matter of much graver concern is the price curve in the essential commodity market has been rising treacherously over the past few months, portending reaching its peak during the month of Ramadan. Not that the government is sitting by; it has taken some appropriate steps to control the price of essential goods but the price horse has gone wild to such an extent that all conventional attempts at bridling it seem to be less than adequate.
When it comes to the question of basic needs of life everybody's business becomes everybody's business, with the exception of those that have a direct hand in the crisis-syndication, middlemen and other avaricious profiteers. Economists are identifying the causes of the present price situation from different angles and providing their thoughtful suggestions, people from other professions including the business community are coming up with their own ideas and the common people are not lagging behind.
One cause most commonly identified is the tortuous supply chain resulting in a huge gap in price between the grower's point and the retailer's end. There are greedy middlemen and brokers active in the chain; in some cases there is extortion; poor infrastructure leads to high transportation costs; those selling perishable goods raise prices of fresh products to compensate for the loss incurred by damaged ones.
Another major cause that many especially those in the business community fervently point out is the fear of doing business on a large scale prompted by the clampdown on corrupt people. They argue this fear factor discourages businesspeople from making further investments in the market-investments that could ensure increase in supply of essential commodities and thus effectively deal with the mad horse.
But by no means the price problem is as simple as that. The oligopoly in the market means more investments by the same vested group will have little, if any, impact on the present price structure.
Certain economic factors such as cost-push inflation and devaluation of the currency also contribute to the rise in price. The price of petroleum and petroleum products has gone up in the international market and so has food price. Moreover, some countries, for example India, Bangladesh badly needs to import some essential goods from have imposed a ban on export of some of the items.
Some economists are critical of the contractionary monetary policy adopted by government in 2005 at IMF's behest. Others blame the price hike partially on the reduction in credit flow and make a case for providing credit and crop seeds to the farmers who have suffered serious damage to their crops on account of the recent, devastating flood.
As with many analytical approaches, expert opinions are divided on certain issues. Not everyone believes market syndication exists anymore or, for that matter, even if it did exist, it would hardly have any bearing on the circumstances leading to the price rise. While some see a connection between high inflation and high growth, others disagree arguing that in the past when growth was high the rate of inflation was low. Some even look at the price rise somewhat positively, maintaining that the trend is attributable to the growth of an affluent society.
It is a cynically self-satisfying view that the present price situation is in some way positive, even if the theory holds water on economic grounds. By all accounts prices of essential commodities have soared beyond the means of a large segment of the population and if the present trend is not contained famine in the near future may not be a distant possibility.
No doubt, the government is very much aware of the gravity of the situation but it has its limitations, some of which are self-imposed. For example, while it may not be appropriate at this stage to lift emergency, business activity is likely to remain somewhat sluggish as long as the state of emergency exists, with all the stringent provisions remaining in tact. And although the government is making its intentions loud and clear that no honest businessmen will be harassed under any circumstances the spectre of the ironhanded anti-corruption commission is enough to make many entrepreneurs shy away from undertaking new ventures.
The out-of-the-way liberal attitude of the government towards the business community nonetheless underlines the government's determination to bring price under control and although at present businesspeople are not as cooperative as they should be and import is far from recovering fully from its slump, a close rapport between the government and the business community is likely to develop over time.
However temporary a measure it could be, supply of essential goods at subsidized rates through Bangladesh Rifles (BDR) and the Trading Corporation of Bangladesh (TCB) has had some limited success. But the government needs to adopt some sound long-term policies aimed at curbing inflation-policies that take into account the realities on the ground and not those dictated by IMF or other donor agencies.
Bangladesh Bank is often alleged to be a bureaucratic body that prefers to go by the book even in situations that demand imagination and innovation. The Bank's indifference to the continued fall in the value of the taka against the dollar at a time when prices of essential commodities were rocketing is a case in point.
It is evident that the present price situation is the cumulative result of a number of complex factors, both domestic and international. While the international factors are beyond the powers of anyone to influence, the domestic ones, now that they have been identified, can be eliminated to a large extent given the will on the part of everyone. Even the consumer has a role to play. As one consumer puts it, "Why eat something when it costs you so much?"
