When prices of widely consumed staples like potatoes, edible oil, sugar or onions spike and remain inflated for extended periods, it understandably hits the poor and low-income people where it hurts the most: in their wallet.

This pain only intensifies if countermeasures, such as monetary tightening and import duty cuts, fail to curb price spirals.

This is the current reality for those with limited incomes, as government data shows recent surges in the prices of essentials.

The consequences could be alarming.

The Integrated Food Security Phase Classification, published by international agencies including the United Nations (UN) in early November, says that nearly 23.3 million people, or 26 percent of Bangladesh's population, are experiencing high levels of acute food insecurity.

Both the report and local businesses blame a combination of internal and external factors for runaway prices.

Flood damage to crops is among internal factors while supply chain disruptions and market syndication -- kitchen market ills the interim government inherited -- continue to fuel price spirals.

Kawsar Hossain, a grocer at the Mirpur-1 kitchen market in the capital, said prices of many daily essentials have increased over the past two or three months, forcing people to tighten their belts.

"Customers who used to buy 3 dozen eggs now buy 1 or 1.5 dozen. Those who used to buy 5 kg of flour are now purchasing 2-3 kg," Hossain said.

Data from the state-run Trading Corporation (TCB) yesterday showed prices of medium rice, non-brand loose soybean oil, palm oil, potatoes, onions, garlic and cardamom have increased in the past week.

The Department of Agricultural Marketing, which publishes daily retail prices of 54 commodities on its website, showed yesterday that prices of 28 commodities have increased and 13 have decreased over the past year.

Tanin Hossain, a private employee who was shopping at the Mirpur kitchen market, said: "Prices of many daily necessities are still very high. I think the government needs to do more in this area.

"If people do not feel relieved, it does not matter how many price cooling measures you have taken," he commented.

Govt resorts to more tightening, tax cuts

On October 22, the Bangladesh Bank hiked the policy or repo rate by another 50 basis points to 10 percent in its efforts to rein in inflation.

That was the 11th time since May 2022 that the central bank hiked the repo rate, which makes money more expensive for banks, to tame demand and curb inflation.

Meanwhile, the interim government has cut import duties on several items in the past three months to bolster supplies in its battle against inflation. The tariff cut list includes potatoes, sugar, edible oil, rice and onions.

However, even amid the tightening and cuts, inflation in October hit a three-month high of 10.87 percent thanks to soaring food prices, especially for rice and vegetables.

In October, food inflation hit 12.66 percent while non-food inflation declined 16 percentage points to 9.34 percent, according to the Bangladesh Bureau of Statistics.

To monitor the market and review the supply chain of essential commodities, the Ministry of Commerce formed a 10-member special task force at the district level.

Besides, authorities are selling food items at subsidised prices through its open market sales programme inDhaka and Chattogram.

Global market also heating up

The prices of some commodities, including edible oil, palm oil, sugar and wheat, have recently increased on the global market.

According to World Bank data, palm oil prices rose by $94 per tonne in October compared to September. During the same period, soybean oil prices rose by $51 per tonne, wheat prices by $13 per tonne and sugar by $4 per tonne.

Taslim Shahriar, senior assistant general manager at Meghna Group of Industries, one of the biggest local commodity importers and processors, told The Daily Star: "Due to the reduction of duties, the price of sugar in the local market has come down slightly and will decrease further."

He added that the price of edible oil had been increasing at an abnormal rate on the international market for the past one and a half months.

"Due to this, the government reduced the import duty, but the price of soybean and palm oil may remain high in the country's market," Shahriar said.

He mentioned that global wheat prices also jumped, but prices had decreased a bit recently. Import flows have also increased.

Market mechanism shows inefficiency

Analysing the market trend of broiler chicken, beef and chilis, a trade body recently pointed the finger at inefficient market mechanisms for price hikes of kitchen essentials.

Besides, the Dhaka Chamber of Commerce and Industry (DCCI) in October blamed high production and transportation costs, limited bargaining power due to market structure inefficiency, seasonal supply, price fluctuations and limited market access for producers as triggers for food inflation.

The DCCI study recommended strengthening the supply chain by reducing intermediaries and importing essential food items that are in short supply due to imbalances between production and demand.

It also suggested implementing a tracking system for cash memos of local and imported food items and providing subsidies for key agricultural inputs like fertiliser, oil and electricity to lower production costs.

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Food inflation above 10% for half a year, why?

Selim Raihan, a professor of economics at the University of Dhaka, said the effectiveness of any initiative depends on its results.

While the interim government has taken several steps regarding price control, in terms of results, there has been no major impact yet. "You may have to wait a little longer," he said.

According to Raihan, persistent price pressures have reached such a stage that ministries and departments need coordinated efforts to cool the market.

He also mentioned that there is an information gap in the production, demand and supply of goods.

Raihan said there is a limit to raising interest rates as it is already hurting the economy in a different way. "Investment and employment generation are being hampered. The government should also keep an eye on that."