High commodity prices, inflation to cause further inequality: CPD

The struggles faced by the country's poor and low-income group – which began with the Covid-19 pandemic in early 2020 – have now worsened by the rampant rise of the prices of essentials commodities.

The pressure of price hikes and inflation will further increase inequality in Bangladesh as a portion of the population keeps grappling with their limited budgets and resources, observed a report prepared under CPD's Independent Review of Bangladesh's Development (IRBD) on Sunday.

As per CPD findings, prices of essential items such as rice, flour, eggs, edible oil, beef, sugar, onions, milk (both powder and liquid) etc. are substantially higher in Bangladesh when compared to the global market.

The civil society think-tank commented that there is a tendency in the country to blame external factors for high prices even if certain commodities do not have any connections with the global demand.   

Shedding light on the volatile crude oil market, CPD suggested the government to make advance purchases to mitigate economic pressure as it believes that making deals when global prices are high will add greater stress on the country, given the shrinking fiscal space.

CPD, during today's (20 March) press briefing in Dhaka, made various recommendations for a swift and sustainable post-Covid economic recovery of Bangladesh.

 The recommendations are as follows –   

• The need for strong market intelligence is critical. 
• Unscrupulous market players have always been active to take advantage of difficult periods, by stockpiling and creating artificial crises in the market.
• Efficient market management through close monitoring and supervision will be critical to keep the commodity prices under control during Ramadan and beyond.
• The volume of sale of essential commodities through the open market system (OMS) should be increased.
• Distribution of these commodities must be managed effectively and without any corruption, so that the eligible people have access to these items at low prices.
• The government should provide direct cash support to the poor, enhance social protection for low-income families, and extend stimulus to the small businesses for their survival during difficult times.
• The government should prepare for maintaining adequate food stock not only through better agricultural production but also through importing food.
• There is a need for actual demand estimation of rice and other food items in the country.
• During a crisis, food-exporting countries would not export food without meeting their domestic demands first. If they decided to export, the prices would be exorbitant. Therefore, planning the production and import of food should be done early on.
• The role of the competition commission needs to be strengthened particularly in the case of the essential consumer goods market. The commission should develop a database, regularly monitor the dominant market players' operations, examine the market control and manipulation (if any), and take proper measures. 
• Inflationary pressure will hamper a sustainable and inclusive pandemic recovery, since the real purchasing power of many people will decline, causing further inequality.