The ongoing tense situation in the Middle East has created a multidimensional impact on the economy of Bangladesh. Since the beginning of the war involving the US, Israel and Iran, import of food commodities from the world markets has become uncertain. As a result, the cost of importing and producing lots of commodities rose sharply. Moreover, prices of essential commodities and services have increased once again due to the surge in fuel prices. In such a situation, most of the people belonging to low and middle-income groups are under immense pressure. The cost of living has increased sharply. The government will have to take a pragmatic decision so that the commoners can sigh a bit of relief to some extent.
According to press reports, prices of almost all essential commodities have shot up abnormally just after the war broke out. Prices of essential commodities like farm eggs, chicken, vegetables, fish, coarse, and medium rice and open flour have gone up. There has been a crisis of edible oil in the markets for the past two months. Whether the government wants or not, the companies have increased the prices of bottled oil at the dealer level according to their whims. People on a fixed income felt a major jerk from cooking gas. Within a period of just one month, the prices of cooking gas have risen twice. Presently, the price of an LPG cylinder has become 1,940 taka. Despite the rise in its price, LPG gas is not available in the markets at a government-fixed rate.
A large number of people are now worried and living in an awkward situation due to the simultaneous rise in prices of essential commodities and services. Since the beginning of the Russia-Ukraine war in February 2022, Bangladesh has been experiencing persistently high inflation for more than three years. According to a World Bank report, Bangladesh is a red-listed country considering the risk of food price inflation for the past three years. The global lending organisation has also warned that poverty will increase anew in Bangladesh due to price hikes and food insecurity. The Iran war has intensified this crisis even more. The ongoing situation is hinting so.
As per experts and prominent economists, increasing the price of fuel is a very easy procedure, but the hard task is to closely analyse its adverse impacts on the general people and formulate a plan accordingly as well as its proper implementation. The government must thoroughly evaluate the negative impacts of the Iran war and the price hike of fuel oil on the citizens, especially on the people of low- and middle-income groups. It should not be an isolated or separate step. Dependency on ad hoc measures and short-term fixes will increase vulnerabilities. Instead, a cohesive framework is essential. A coordinated plan is a must under which the jurisdiction and periphery of the social protection head will have to increase. Moreover, providing direct financial assistance to low-income households through the existing social welfare programme would be more effective. Because of this reason, the sale of TCB goods will have to be enhanced so that rural and urban people belonging to low-income groups can get the commodities at an affordable price. In such a reality, the upcoming budget must be a budget of critical economy. The government needs to control non-essential spending and increase allocations in social protection schemes in the next budget. When budgets are tight, prioritisation is key. The upcoming FY2027 budget should reflect a decisive move towards rules-based governance. The next budget should prioritise policy credibility over short-term gains.
Leading economists and market analysts think that prices of some commodities have shot up due to a rise in production and transportation costs as well as due to a supply crisis. But at the same time, some unscrupulous traders are exploiting the existing crisis as an opportunity and increasing the prices of daily necessities as per their whims. Apart from this, widespread extortion in the names of different transport associations during the transportation of goods is also behind the surge in prices of essential commodities. The government must stop extortion during the transportation of goods by taking strict measures and strengthening the market monitoring system.
If the government takes a planned and collective step, people in general will heave a sigh of relief to some extent from the unbearable price hikes of essentials and high living expenses. Meanwhile, the government has announced that it has a plan to bring people of all strata of society under the social protection scheme.
The views expressed in this article are solely those of the author
The writer is a student, Economics, North South University. E-mail: [email protected]
