Fuel price hike inflates further essentials cost in Bangladesh

Prices of essentials rose by up to 14 per cent in a week in Bangladesh after the country witnessed a record hike fuel price recently, immediately affecting the transport sector, sparking street protests.

According to a State-run Trading Corporation of Bangladesh (TCB) tally, the prices of most essentials continued to go up every day since the government enhanced the fuel prices.

“During the past one week prices of 25 out of 26 essential items spiraled,” said a spokesman of TCB, which monitors the market, on Saturday.

TCB said the price of Bangladesh’s staple rice rose by 22 per cent, farm-grown chicken by 45 per cent, onion by 43 per cent, egg by 20 per cent and fish by 10 per cent in the past one month.

“The prices of essentials rose by up to 14 per cent in a week after government hiked fuel prices,” the Daily Star estimated based on the TCB price chart.

The Samakal newspaper carried a report on the situation, which said the market went beyond all estimations.

Bangladesh's inflation rate remained above 6 per cent for the past nine months and hit 7.48 per cent in July, exposing middle class and poorer families to miseries to meet their day to day expenses.

In a sudden announcement the government last week increased petrol prices by 51.2 per cent to $1.38 a litre, 95-octane gasoline by 51.7 per cent to $1.44 and diesel and kerosene by 42.5 per cent, a hike said to be the highest in one go since Bangladesh’s 1971 independence.

The commuters and transport users first swallowed the first brunt of the hike as the bus and truck owners immediately enhancing the fare.

Several thousand protesters took to streets in major Bangladesh cities with angry masses besieging fuel stations while the government attributed the hike to the ongoing Russia-Ukraine war.

But the hike came even as oil has fallen back in recent weeks as recession fears mount while most independent financial analysts said the country could have contained the petroleum hike adopting other means.

“The government could have done it (hike) gradually to minimise the losses . . . the fuel price could be increased by 4 to 5 percent over a six-month period,” former director of state-run Bangladesh Institute of Development Studies (BIDS) Asaduzzaman said.

The energy ministry initially issued a brief statement in its efforts to justify the decision with officials saying, higher fuel prices in the neighbouring countries and particularly in India partly forced them take the decision to stop smuggling.

But Prime Minister Sheikh Hasina asked the energy ministry to come up with a detailed explanation to the people.

Bangladesh economy stood at $416 billion during the current fiscal which is regarded as one of the fastest-growing in the world for several consecutive years but soaring energy and food prices inflated its import bill.

The situation earlier this month forced the government to seek loans from global agencies, including the International Monetary Fund (IMF).

“This is an unpopular decision on the part of political government as the new prices seem to be intolerable to many . . . but we had no other options,” state minister for energy Nasrul Hamid told reporters. Hamid, however, said expected the prices could be readjusted soon once global prices fall and appealed for patience.

“We are repeatedly asking everyone to be frugal, to save on fuel and to use cars less often because the transport sector is the biggest user of diesel,” he said.