Consumers brace for price shocks

Consumers are bracing for multiple price shocks ahead of Ramadan that usually marks a period of high household spending.

One major shock comes from a spike in the prices of essential goods. To make matters worse, electricity prices are set to go up by 34 and 70 paisa per unit effective from March. This represents a 7-10 percent jump from a year earlier.

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This comes at a moment when the government struggles to contain stubbornly high inflation. The Consumer Price Index climbed 45 basis points to 9.86 percent in January from the previous month, defying measures undertaken by the central bank to curb inflation.

The Daily Star visited 11 kitchen markets across the capital  in the last two days, including markets in Mirpur, Purba Shewrapara, Kachukhet, Mohakhali, Gulshan, Korail, and Karwan Bazar to gauge how price shocks affect the people on the margins.

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Following recent surges, market prices appear stable. Yet for lower and fixed-income groups, prices are out of reach already, and things may go from bad to worse when the new electricity prices come into effect.

Hazera Begum, a worker at a sweatshop, and her husband Alpon Miah, a labourer, said their combined monthly income of around Tk 20,000 is not enough to support two school going children and elderly family members in the village.

After paying Tk 3,500 in rent at Korail slum and spending for food, utilities and transport, they have very little left to send back home. Five years ago, they made less money, but were able to save. But their income has remained static in the last couple of years while rent has gone up by Tk 700 in January. With rising electricity prices, they fear it may go up again.

"Tk 200 used to be enough to buy groceries. Now, Tk 300 is not enough," said Alpon Miah.

Hazera Begum said that their diet consists of cheap fish twice a week, and shutki, dal, and eggs with rice on most days.

The price of daily essentials has become a thorn in the side of people of different social strata. Mohammad Hasan, staff member at a mobile shop of the government's subsidised open market sale programme in Purba Shewrapara, said, "Since anyone can buy food from our truck, house owners and solvent people along with the poor are queuing up behind our shop these days."

The common varieties of dates -- a must have iftar item for many -- are going for Tk 500-1,100 a kg in Karwan Bazar and Kachukhet, up from last Ramadan's Tk 250-450. This has happened even though the government reduced import tariffs on rice, sugar and dates earlier this month.

Soybean oil prices have gone down recently. A five-litre bottle which was previously Tk 835-840 now goes for Tk 810-820.

Traders say that despite tariff reduction, sugar is now going for Tk 140-160 a kg, up by Tk 5-10 from last week.

Among other Ramadan staples, chickpeas are being sold for Tk 95-105 a kg, up by Tk 5-10 from two weeks ago; and puffed rice for Tk 70-80, up by Tk 5-10. Traders in Karwan Bazar said that in anticipation of Ramadan, sellers have started hoarding puffed rice.

Prices of the local variety moshur dal have been stable at Tk 140-150 a kg for over a month.

Red meat has been beyond the reach of the lower income group for quite some time. Prices of beef have gone up from Tk 650 a kg two months ago to Tk 750, while mutton is going for Tk 1,100-1,150 now.

The prices of chicken increased recently. Each kg of broiler chicken now sells for Tk 200, sonali chicken between Tk 290 and Tk 330, and the indigenous one between Tk 550 and 600.

Eggs are now at Tk 130-135 per dozen, down by around Tk 5 from recent prices.

Compared to last year, prices of cumin have risen by 32 percent, According to data published by Trading Corporation of Bangladesh.

Tofayel Ahmed, owner of M/S Al Amin Traders in Karwan Bazar, said, "Isabgol is now Tk 2,000 a kg, up from Tk 900, Rooh Afza is Tk 550 a litre, up from Tk 380 in last Ramadan."

The dual threat of rising electricity prices and spiralling cost of essentials in Ramadan may put consumers in a chokehold that many will struggle to escape.

Expressing worry over the impending rise of electricity prices, Mahbuba Begum, a retired official of Petrobangla, said, "If electricity bills go up then the price of almost everything follows suit."

Ghulam Rahman, president of Consumers Association of Bangladesh, said, "The government will point to the devaluation of taka against the US dollar as a reason for the rise in electricity prices. We have spent enormous sums on capacity building and we have resorted to quick rental power – these display a failure to make the right decisions. I implore the government to make the right decisions at the right time, stop wastage, and address the lack of transparency in the sector.

"Our apprehension is that people will suffer in Ramadan."