Market volatility beyond demand-supply rules

Rain was the pretext for green chilli hitting the Tk 400 a kilo mark. Other vegetables, except green papya, did not lag far behind to the consternation of consumers. Now after the rain has been replaced by sunny days, eggs have suddenly registered a price hike of Tk 10 for a dozen from Tk 140 to Tk150. All kinds of chicken including broiler have been pricier by Tk 10-15 within a week. Vegetable prices show no sign of a letup with the majority of those selling at Tk 60-80 and few crossing the Tk100 mark. With such price escalations, there is no indication of inflation coming down to the relief of at least some of the general consumers. 

The inflation rate rose to 8.36 per cent from the previous month's 8.29 per cent, claimed to be a three-year low. In fact, the statistical jugglery hardly represents the ground reality. The 8.29 per cent rate of inflation in August last is suspect. Prices of essentials including the staple did not fall. Only potato price plummeted and that cannot account for the drastic fall of the double-digit inflation at 10.87 in October 2024. Rice, cooking oil, vegetables, eggs and meat did not record any decline in prices. The conclusion drawn on the rise in September inflation is simply ludicrous. Higher prices of food and non-alcoholic beverages have been blamed for the inflationary upturn last month. Food price is a dominant indicator but non-alcoholic beverages can hardly match out-of-pocket medical or educational expenses.  

Well, there is no evidence of food prices relenting over the past few months. Even price rise of rice in peak harvesting period could not be explained by common knowledge and expert opinions. Although the staple prices have remained at the same level of last month, at the end of October, the inflation should be higher than that of the previous month. Prices of the more basic items for sustenance of life have been on a higher trajectory for long. The reality at the grass-roots level is harsher than the statistical data can present. Irrational price rise is not a one-off affair, it is routine in this country. Business syndicates are so strong that they feel free to unilaterally raise prices with scant regard for the government or consumers.

The unilateral price rise of cooking oil is an example of how business coteries defy the government. Here is a commodity that is simply refined from its crude form to edible composition. For their contribution they are assured of a margin of profit. Now the question is, what profit margin should be acceptable to the stakeholders. 

The refiners of soybean and palm oil and the government find themselves at logger-heads over the unilateral price increase by the former. When the ministry of commerce made its dissatisfaction known, the refiners stopped marketing oil at higher prices. This is a ploy to arm-twist the government to realise their demands. The supply-line disruption in a monopolistic market can prove to be an effective weapon for businesses. But making a commodity costlier than it should have been has become a norm here. This government has acquiesced to such pressures all through its short tenure like the immediate past fallen regime. This time the government seems not to be particularly pleased with the refiners' move to the price increases of Tk6.0 and Tk13 for a litre of soybean oil and palm oil respectively. 

Such abnormal price increases stoke inflation and hit not only the poor and marginal segments but also lower middle and middle-income people in society. The deliberate disruption of supply to the market certainly creates panic among consumers and pressure on the government. This has put the government to test. Can it hold its ground and thwart the ploy in the interest of the general consumers? Artificial price increases have ever remained a bane for this country and the refiners must not be allowed the manipulative space. Inflation can be tamed if the business syndicates are dismantled in favour of a competitive market.

nilratanhalder2000@yahoo.com