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To control inflation, the government should invest in better transportation networks to ensure the timely delivery of food items, develop storage facilities to reduce food spoilage and wastage and streamline the supply chain ecosystem, according to a study of the Dhaka Chamber of Commerce and Industry (DCCI).
The DCCI recently conducted a study to understand the dynamics of the price changes of essential commodities across their supply chain and devise a mechanism for monitoring and controlling the volatile commodity market.
The study reflected information from 600 respondents from 49 districts of 8 divisions on 21 essential commodities out of which 12 products are locally produced and five are imported and four are both imported and locally produced.
The chamber revealed the study at a seminar on "Food Inflation: an Analysis on Price Dynamics of Essential Commodities" at DCCI auditorium in the city.
AKM Asaduzzaman Patwary, executive secretary, Research and Development department of DCCI presented the keynote paper.
The study found that due to increased production cost, low supply, inefficient market mechanism, high transportation cost and market dominance by wholesalers, limited bargaining power are few reasons behind commodity price hike.
Few more reasons are also behind price fluctuation like artificial crisis, LC opening problem, seasonal price variation, depreciation of taka and supply chain inefficiency, inadequate storage facilities, limited market access by the producers.
Major reasons for current food inflation found are lack of coordination among demand, production and imports of essential products. Also, inefficient market system and information asymmetry, decrease of local production and high transportation cost, high cost of fertilizers, seeds, oils and medicines including pesticides and high input cost.
At the seminar, DCCI President Ashraf Ahmed said despite the high price differentiate between producers and consumers, producers are not getting the reasonable price.
Sometimes, indirect costs are involved in increasing prices, he said.
"If we can reduce the input cost in storage, transportation and processing stage, then the price may have come down," he added.
Moreover, the DCCI president pointed out the wastages of perishable items is large and only processing can be a better solution for this loss.
He, later, underscored the importance of having proper supply and demand data, data analytics and assessment for a getting a perfect policy guidelines.
Dr Sayera Younus, executive director (research), Bangladesh Bank said that inflation control is the most priority for the central bank right at this moment.
She also said that despite of increasing policy rate by the central bank in recent times, the inflation does not come down at the expected level and its main reason is non-economic factors.
"Not only that, few other factors like international market dynamics, exchange rate hike, increased import cost are also responsible for inflation," she added.
Saifuddin Ahmed, joint secretary, Trade Support Measures Wing, Ministry of Commerce, said that market data analysis is crucial for having appropriate policy guidelines.
"We have to do research to find out the actual demand, supply capacity, what is the production capacity, what is our seasonal demand, what is the variation. There should be an annual statistics based on 'product calendar' as it will facilitate government's taxation process of imported goods and other procedures as well," he added.