Retailers add to price hikeMCCI, Katalyst organise discussion on study findingsHigher margins charged by retailers are partly to blame for a price hike in essential commodities, according to a study released yesterday. The study said retailers count high profit-margins because of high fixed costs, transportation costs and their obligations to make informal payments. "We have that retailer's margins are higher than wholesaler's margins for various essential commodities," said Selim Raihan, co-researcher of a study on 'Price Volatility: Issues and Concerns'. Raihan, associate professor of economics at Dhaka University, and Bazlul Haque Khondker, professor of economics at Dhaka University, jointly conducted the study that was unveiled at a discussion at the Metropolitan Chamber of Commerce and Industry (MCCI). MCCI and Katalyst jointly organised the programme where former Bangladesh Bank governor Dr Salehuddin Ahmed and daily Prothom Alo Editor Matiur Rahman also spoke. MCCI President Anis Ud Dowla chaired the programme where discussants said volatility and a rise in food prices erode the purchasing capacity of consumers, especially hardcore poor and industrial workers, directly contributes to a spike in inflation and reduces real GDP. They also said volatility in food prices affects businesses and government policies. Discussants linked various factors to volatility and the rise in domestic food prices. The control of supplies of essential items, such as sugar, edible oil and pulses, by a few players, a lack of effective local and international market price monitoring systems by the government and a presence of middlemen in the supply chain contribute to commodity price volatility. Participants also blamed the presence of informal payments, huge import dependency on some essential food items, such as edible oil, a lack of data on the demand for essentials and a weak legal framework for the hikes. "Bangladesh is a small open economy where the domestic market does not determine prices alone. We also import inflation," said the former BB governor. "We should examine both the domestic supply chain and import price in monitoring the prices of essentials. We need to monitor prices effectively," he said, suggesting involving the local governments in price watch. He said the government should not intervene in the market to control prices without any rules. "Rather, it should share information on price movement with consumers," said the former central bank chief. Ahmed also favoured opening a commodity stock exchange as a means to restraining price volatility and for the speedy passage of the Competition Law to prevent cartels and other practices. He also said steps should be taken to raise people's purchasing capacity and give wider scopes to generate income. Matiur Rahman, the editor and publisher of Prothom Alo, said the government should take measures to reduce the margin of middlemen. The price of an item goes up by 40 percent in the intermediary stages between production and remarketing, Rahman said. He said the present government made several commitments, including bringing down the prices of essentials to within purchasing capacity and curbing extortion. "It has been about 16 months of the government. But it is yet to show any visible result," Rahman said. "It appears that the government has failed to keep the prices of essentials stable." Anis Ud Dowla said the prices of essential commodities fluctuate every now and then due to a lack of an effective price monitoring system S M Nazer Hossain, Central EC Member, Association of Development Agencies in Bangladesh(ADAB) 1/E(1st floor) Uttar Adabor, Dhaka-1207, Bangladesh Tel: 880-2-9126358, Fax: 880-2-8117756, 01713110054, 01726757788(Director) |
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