Rising costs derail economic recovery of poor

When his children ask Russel Shaikh why there is no meat and even fish in their meals, he has no answer. This is because he simply has no choice as soaring prices of essential commodities and the rising cost of living have hit hard the pockets of the low-income people like him.

"I can't afford it," said Russel, in a broken voice while he was sharing the ordeals he has been facing nowadays.

The father of two was forced to go back to his village in the southern district of Pirojpur after losing jobs to the onslaught of the coronavirus pandemic in November 2020 and stayed there for five months. He began to see his wages recovering after the resumption of economic activities.

Beginning with a maximum of Tk 300-400 a day, the day-labourer started earning Tk 650-700 at the end of 2021, which promises that better days might be ahead for his family.

His dream, however, is now shattered. The soaring prices of essentials, resulting from supply disruptions, record high freight costs, and the Russia-Ukraine war, along with increased house rents are eating much of his income.

From rice, edible oil and pulses to potato, onions and eggs, prices are higher now than a year ago, which are forcing him to count more of his hard-earned income to make a living.

Like Russel, tens of thousands of low-income groups and poor families now face a similar situation.

Inflation shot up to a 17-month high of 6.22 per cent in March. And the rising consumer prices are threatening the recovery of many poor and vulnerable families rebounding from the pandemic and raising the risk for many families to slip back into poverty again.

Officially, the rate of poverty did not see any change despite the income and job losses caused by the pandemic. Several research organisations found in their surveys that the rate of poverty surged to 42 per cent, double the official figure. 

The middle-aged Russel earns Tk 17,000 a month. Of the money, he has to spend Tk 5,700 for rent for a tin-shed room in the Amin Bazar area of the capital where he lives with his family.

He sends Tk 3,500 to his parents living in the village. His family has to depend on the rest to buy foods and other essentials to survive.

"I had been overcoming the crisis gradually and moving forward. Now, the increased prices of essentials have made it tougher," Russel said.

Khairul Islam, a street vendor who sells t-shirts and accessories in the Mirpur-1 area, also has a similar story to share.

When the coronavirus pandemic spread in the country, he lost his income and he had to depend on the handouts he received from the people in the locality.

His sales picked up before Eid-ul-Fitr, the biggest spending season in Bangladesh. But since the festival is over, sales have fallen again and come down Tk 500-600 per day now.

"The big reason is the increase in the prices of almost every essential item," said the 29-year-old hawker.

"I had thought I would be able to overcome the Covid-19 crisis and return to the pre-pandemic level. But as the days go by, it seems that it will not be possible anymore."

He used to eat fish every day before the latest price hike. Now, he can afford only vegetables.

"Now I eat fish once a week. Eid was the last time when we had meat. With the money I earn, it is becoming very difficult to bear expenses."

Khairul, with a heavy heart, says he has two shirts and two pairs of pants and vows not to buy any new clothes until they are torn.

He blamed himself for falling into financial stress as he did some shopping during Eid.

"I thought that I had overcome the Covid-19 crisis a bit," he said, adding that more spending cuts will be needed in the coming days.

For Joy Charan Das, a cobbler at the East Tejturi Bazar area in Dhaka, life has become tougher.

"Now I eat two meals a day -- in the morning and at night. I skip lunch as I can't keep pace with the rising expenses," said Joy, who saw his income recovering but that was inadequate to meet his family's expenses.

What is even worse, he had to stop repaying loans that he borrowed during the coronavirus pandemic.

"Now I've left everything to fate. God will do what he thinks is best for me," said Joy, with teary eyes.

WHAT ECONOMISTS SAY

Binayak Sen, director-general of the Bangladesh Institute of Development Studies, said people who had lost jobs and income were able to make the turnaround in the middle of 2021.

"Now increasing food prices will make the recovery difficult for many. There is a risk that a section of people will fall into poverty."

According to the economist, the government supplies wheat to beneficiaries under a number of social protection programmes. "So, it is necessary to ensure the sourcing of wheat from abroad."

Qazi Kholiquzzaman Ahmad, chairman of the Palli Karma-Sahayak Foundation, describes inflation as a big challenge because rising prices affect common people and increase the cost of production.

"Poor and low-income people are feeling the pinch of inflation now."

Selim Raihan, executive director of the South Asian Network on Economic Modeling, said vulnerable groups and poor families are under a lot of stress.

"Their real income has fallen. Many may have fallen below the poverty line."

In the last eight to 10 years, the price of goods has not increased as much as it has now, he said.

"The income of many people has not returned to the pre-virus level. As a result, the vulnerability of the vulnerable groups has widened further."

Prof Raihan suggested the government sell essentials through the open market sales operation of the Trading Corporation of Bangladesh, expand coverage and increase the allowance under the social protection programmes.

"Similarly, issues such as anti-competitive practices, manipulation and hoarding must be tackled to ensure smooth supply."