Hiren Pandit: Middle-class and low-income people are in crisis as the cost of living has increased several times. On the other hand, people are struggling to meet the cost of living without increasing their income. The prices of everyday products have gradually increased from rice, dal, oil, sugar, fish, meat, and vegetables. Many things are being cut from the daily diet to cope with the pressure of increased expenses. Many people are getting into debt. Analysts say this pressure may remain this year as well.: According to the Consumers Association of Bangladesh (CAB), the cost of living has increased by 10.08 percent in 2022. According to the consumer rights body, the cost of living rose by 6.92 percent in the previous year (2021). Accordingly, the cost-of-living increase rate in 2022 compared to 2021 is 3.16 percent.
According to Bangladesh Bureau of Statistics (BBS) data, people’s income increased by 5.97 percent in October 2021. Income rose 6.91 percent in October last year. Revenues increased by 0.94 percent year-on-year. The inflation rate increased from 5.70 to 8.91 percent during the same period. However, several private research organizations have raised questions about the inflation and income growth data of BBS.
“The cost of living has gone up a lot. The consumer’s breath is rising. There are numerous reasons for rising costs, which many of us know. Traders are making more profit. The price of goods is increasing due to an increase in dollar price, increase in fuel oil, gas-electricity price, and price increase in the international market. It also increases the cost for people.
When people’s income increases, even if the price of daily commodities increases, it is bearable. But the income of many people has not increased. The situation of working people and low-income people is more critical. Last year was bad, this year will be better, there is no hope for that either. Consumers are not organized. Again, those who are responsible for protecting them are the ones who are raising the prices of the products.
Annual Inflation Average annual inflation in Dhaka was 10.08 percent higher than in the first month of 2022. Although average inflation was lower than that of food and non-food segments at 10.03 and 12.32 percent respectively, both touched double digits. However, the average inflationary pressure on the low-income group was 9.13 percent lower than that of the general household. Food inflation was lower than annual non-food inflation at 10.41 and 7.76 percent respectively, although both categories of goods and services were basic in nature.
According to the CAB report, the cost of living increased by 6.88 percent in 2020, compared to 6.50 percent in 2019. Apart from this, in 2018, the cost of living and price increase was 6 percent respectively. According to the latest BBS data, inflation rose to a high of 9.52 percent last August. Since then, the rate has come down to 8.85 percent till November. But the prices of almost all kinds of products have increased during this time. A hike in gas prices and earlier in electricity prices at the retail level has been announced. There is talk of increasing the price of water. Further increase in gas and electricity prices will increase production costs in all sectors. Due to this, the cost of goods, transportation, education and health sector is increasing.
The price of rice has increased abnormally. Apart from this, average house rent and flat house rent has increased in WASA water, lower and lower middle class. According to BBS data, headline inflation reached a record high last year since 2011. Inflation has soared in both urban and rural areas, adding to the misery of millions of low- and middle-income families in Bangladesh. Money printing should be reduced to reduce inflation. Monetary policy should be used to reduce inflation. To reduce inflation and the dollar crisis, we need to support the exchange rate and reduce the exchange rate. We can’t do that. If the exchange rate falls further, the debt crisis will get bigger.
Individual consumers in the Dhaka megacity spend relatively little more on the non-food basket, which includes non-food products and various services. In the second half of the year, there was a sustained rise in the prices of these commodities, leading to high non-food inflation. Second, low-income populations consume very basic, low-cost, and limited food items, some of which are characterized by seasonal effects and relatively stable prices in terms of prices. Because they are in strong supply like coarse rice and cheap fish.
Monitoring should be increased to maintain stability in the market. Strict action should be taken against syndicates and corrupt people. National Directorate of Consumer Rights Protection, Bangladesh Competition Commission, Ministry of Commerce, CAB and media should work together to establish good governance in the market. The challenge of high inflation will continue throughout the coming year. Efforts should be made to keep product supply stable as far as possible. We need to increase domestic production and revenue generation. Dependence on imports can be reduced as far as possible with domestic resources. The scope of social security programs should be increased to meet the challenges.
As inflation continues to rise and the value of money declines, people’s purchasing power continues to decline. On the other hand, the cost of living and quality are decreasing. People’s lives are shrinking due to expenses. At the same time, great pressure has been created in the overall economic management.
Gas prices increased till June; electricity prices increased in January. Fuel prices were hiked in August. Fertilizer prices were hiked in August. It has a negative impact on all sectors. The production cost of the industry has increased. Due to this, the price of the product has increased. Which has made people’s living expenses. At the same time, public transport and goods transport fares have increased unbridled. Due to an increase in gas prices, the cost of electricity generated with gas will increase. Battery-powered public transport fares will also increase.
Captive power is the main driver of uninterrupted power generation in industries. The price of that captive power has been increased by 88 percent. Instead of 16 rupees per cubic meter, now you have to pay 30 rupees. It will increase the production cost more than twice. However, there is still uncertainty regarding the availability of uninterrupted gas electricity. Altogether the cost of movement of goods and people will increase. The cost of production in the agricultural sector is increasing due to an increase in electricity and fertilizer prices.
Fuel oil, gas, and electricity are called the lifeline of the economy, which is like the blood circulation of the economy. All kinds of goods and services and people’s way of life are influenced by them. That is, global or human life cannot be imagined without these products and services. That is why if the price of these products increases in the country or abroad, it’s a negative impact on the domestic financial management from the international arena.
A sudden increase in gas prices will increase the cost of all kinds of goods and services. Its negative impact will be the most in the export and industrial sector. If you buy gas at a high price and generate electricity, its cost will also increase. Boiler operating costs of gas-dependent industries will also increase. In particular, the cost will increase in the textile, ceramic, plastic, iron, engineering, shipbreaking, and steel industry. If their prices increase, the cost will increase in many sectors including construction, housing, and development costs.
A new increase in electricity prices at the consumer level at an average rate of 5 percent will increase production costs in all sectors. This time, electricity prices have been increased at an average rate of 5 percent in the household, agricultural irrigation, industrial and commercial establishments, small industries, construction industries, religious, educational and charitable institutions, water pumps, electric vehicle battery charging, and medium, large and heavy industries.
This will increase the cost of irrigation in agricultural production. The production cost of industry in these sectors will increase. It will increase the price of the product. Electric battery charges may also increase the cost of charging. Increasing the cost of electricity for water pumps will also increase their cost.
The cost of production of industrial goods has already increased by 25 to 50 percent due to an increase in dollar price, fuel oil, electricity price, gas price and increase in the price of raw materials in the international market. At the same time, the price of agricultural products has increased. The prices of industrial goods also increased by more than 30 to 50 percent. Meanwhile, overall sales have fallen due to lower consumer incomes.
The writer is a columnist and a researcher.