Price hike often turns to be a cause for major concern in Bangladesh. Very recently, the fuel price was increased all of a sudden that received huge public criticisms. In the last year, the price of onion skyrocketed unpredictably. Besides, the price of many other commodities including edible oil, rice and sugar are frequently hiked. Of course, ups and downs in price are not unexpected at a certain range. But the price of different goods is increased in Bangladesh without convincing reasons on many occasions. Also, the period of price hike lasts for months before the price comes down giving more opportunities to traders for illegal earning and causing an extra burden on consumers. And once the price increases, it does not decrease as desired on many occasions.
Price hikes in Bangladesh can be explained by economic and other reasons such as supply, demand, competition, and government regulation or policies. Notably, a decrease in the supply of a commodity, according to the law of demand and supply, usually leads to an increase in the price, given that the demand remains the same. Also, when demand increases and supply remains the same, the price usually increases. Of course, many factors including the availability and the rising cost of raw materials, rising production cost, an increase in transportation cost, the rise of the price (of a given commodity) in the international market, and weather conditions or natural disasters decrease or disrupt supplies and increase the price. Some seasonal, emotional, social and other factors such as winter, religious festivals, and Bengali New Year increase demand for certain commodities giving rise to the price.
Of course, artificial crisis, or a shortage of supplies (a condition where the quantity supplied is less than the quantity demanded in the market at a particular point in time) that is created artificially, deserves to be noted here as an important cause of price hikes in Bangladesh. According to available sources including newspapers, an artificial crisis of commodities is made by traders, though the stock of a given goods remains enough or there are enough productions of a given item. An artificial crisis of supplies is created usually by stockpiling a commodity without selling it for a certain time. Consequently, there is an abnormal disruption to the usual supply line or the supply of a given commodity turns to be less than the demand leading to a price hike. The main aim is to increase the price and earn extra money.
It is notable that in the creation of the artificial crisis of supplies of different commodities, traders play the most significant roles. They create an artificial shortage for a certain period and increase the price without any convincing reasons. Different types of businessmen, including but not limited to, mill owners, wholesalers, and importers act together to create an artificial shortage of supplies. But, of course, traders including wholesalers and retailers are not the only group responsible for artificial shortage in Bangladesh. As it is criticized, others including warehouse keepers and political leaders are also involved on many occasions. With some differences, the artificial crisis of commodities consequently becomes a win-win situation for all involved with the syndicate or the manipulative processes.
Of course, different government bodies including the commerce ministry make efforts to curb down the abnormal price hikes. Regulatory efforts range from general price control to price hike-reactive efforts. Some relevant regulatory steps are regulation of the price of imported goods, establishing the domestic price or fixing up prices of certain goods, subsidized production programs, investigation of market situations and inspection of storage, monitoring market prices, imposition of restrictions on hoarding, and providing instructions for the listing of commodity prices of everyday items. Obviously, the government takes other steps including procurement of supplies of certain goods, subsidized selling through the Trading Corporation of Bangladesh and facilitation of imports of goods on an emergency basis to secure supply lines or reduce the price. Also, mobile courts are sometimes used to bring price hikes under control with punishments such as fines. But price hiking practices continue.
But an important question can be raised on why regulatory measures fail to end manipulative efforts to hike the price or deal with the price hike as desired. Undeniably, there are many institutional, syndicate-based and other reasons behind the failure. Of course, regulatory efforts are not enough. There is a lack of consistent monitoring of market situations and prices and the coverage of monitoring is limited. In most cases, increased regulatory efforts are visible when price hikes receive huge public criticisms, not in pre-price hike situations, and there is a tendency of delayed response. Traders, agents and others involved with the syndicate or price hikes are not identified and strong actions are not taken against them on many occasions. Also, there is a lack of strong political intention here. Traders including wholesalers and retailers take advantage of it and, consequently, there are incidents of not abiding by regulatory instructions by traders and price hikes continue.
Of course, the price cannot be controlled by the government alone since supply and demand determine it in the free market economy. Yet, government regulation is needed for securing affordable prices. This is the case especially in inelastic or everyday goods and services. Thus, the artificial crisis and price hikes need to be curbed down with the improved effectiveness of regulatory efforts. In this respect, relevant government bodies including the ministry of commerce, the Directorate of National Consumers Rights Protection and city corporations need to do a lot. But, of course, some notable shortcomings with the designated government bodies including an inadequate market vigilance mechanism and a lack of institutional capacity to enforce decisions need to be well-addressed. Moreover, a strong political commitment is very important for better regulatory outcomes.
To curb down abnormal price hikes in Bangladesh, some steps including securing a smooth supply chain, consistent monitoring of market situations and prices with increased coverage, tracking prices of limited (every day) commodities, implementation of price-related decisions, effective de-hoarding of commodities, providing prompt response and undertaking public hearings especially before raising the price of goods such as fuel need to be given emphasis. It is notable that a prompt response of relevant bodies just before and immediately after the price hikes can help not only quickly avoid or overcome artificial crises and abnormal price hikes but also reduce the effects of the price hikes. Of course, the identification of actual reasons for price hikes and addressing convincing causes (including supply constraints) are crucial for making better efforts and generating better outcomes.
Moreover, the identification of traders, agents and others involved in creating an artificial shortage and abnormal price hikes without any convincing reasons and bringing them into justice are imperative in controlling artificial crisis and price hiking practices. Indeed, the main actors of artificial crisis remain out of reach on most occasions as they are powerful and/or have links with powerful persons. Of course, increased usage of mobile courts can be enormously helpful in controlling artificial shortages and abnormal price hikes. Mobile courts have shown some good outcomes in this respect. The establishment of an effective mechanism of complaints in the Directorate of National Consumers Rights Protection and prompt addressing of complaints made by consumers can also be effective.
It is relevant to mention here that there is a tendency among traders to abnormally hike prices of different goods and services during major festivals in Bangladesh, even though there is no shortage of their supplies. Moreover, such a practice is willingly or unwillingly accepted for guaranteed. In my opinion, this tendency deserves to be given a second thought. Indeed, the price of different daily goods is reduced during festivals in many other countries. At least, it is desired that the price of different goods and services is not abnormally increased in Bangladesh, even if it is not reduced, during festivals.
