Bangladesh - Prices of Essential Commodities : Recent Trends, Underlying Factors and Policy Options
There is a concern in Bangladesh that prices of essential commodities, mainly food items including rice, wheat, pulses, sugar, edible oils, ginger, garlic, onion and potato, have shown an upward trend in the past several months. Media reports in recent weeks are full of government actions including pictures of personnel of Bangladesh rifles manning fair price shops and selling essential food items to the lower and lower-middle income classes. The government's concern of the impact of rising food prices on the welfare of the poor is quite understandable. According to the 2005 household and income expenditure data, these food items account for more than one-third of the annual household expenditure of the bottom 20 percent of the population. What is the true picture of rising food prices in Bangladesh? How much of the rise is due to changes in demand and supply in the international commodity markets? What domestic factors, particularly in the very short-run, i.e., a week to ten days, account for the price rise? What measures has the Government of Bangladesh taken to check the price rise and what other options exist to deal with the prevailing situation? This note addresses these questions.
| Summary: | There is a concern in Bangladesh that
prices of essential commodities, mainly food items including
rice, wheat, pulses, sugar, edible oils, ginger, garlic,
onion and potato, have shown an upward trend in the past
several months. Media reports in recent weeks are full of
government actions including pictures of personnel of
Bangladesh rifles manning fair price shops and selling
essential food items to the lower and lower-middle income
classes. The government's concern of the impact of
rising food prices on the welfare of the poor is quite
understandable. According to the 2005 household and income
expenditure data, these food items account for more than
one-third of the annual household expenditure of the bottom
20 percent of the population. What is the true picture of
rising food prices in Bangladesh? How much of the rise is
due to changes in demand and supply in the international
commodity markets? What domestic factors, particularly in
the very short-run, i.e., a week to ten days, account for
the price rise? What measures has the Government of
Bangladesh taken to check the price rise and what other
options exist to deal with the prevailing situation? This
note addresses these questions. |
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