Although food prices in the global market have now dropped back to pre-Ukraine war levels after hovering around record levels for a few months, consumers continue to pay through the nose as there is hardly any price reduction in the local market.
Whenever commodity prices go up in the international market, local traders are prompt to go for upward adjustments. But when the time comes for downward adjustments in keeping with global trends, they are too slow to respond.
Take the cases of edible oil and wheat – their global prices have been on the decline for a few weeks now but only a slight drop has been reported at the wholesale markets in Bangladesh while there is no impact at the retail level. Thus, as always happens – consumers end up poorer.
The commerce ministry, which hiked retail prices of edible oil in the face of global surges, has not yet intervened in adjusting its prices in response to its cooling down from record highs in the international market.
Prices of everything from cooking oil to wheat and corn have tumbled to the lowest levels in months on increasing supplies as investors have reduced their bullish bets on futures markets, according to a Bloomberg report.
Palm oil has plunged more than 45% from its record close in April to the weakest level in a year, while wheat has slumped over 35% from an all-time high in March, and corn has dropped about 30% from its peak for the year, it said.
But the country's largest commodity wholesale market at Khatunganj in Chattogram does not show any noticeable impact from such massive price drops in the international market.
Consumers continue to be squeezed by cost burden
Palm oil price fell at least Tk94 per litre in the global market from its March peak, while it saw a Tk49 decline in Khatunganj wholesale market in the last couple of weeks.
For soybean oil, the decline was Tk21 per litre in Khatunganj against a Tk30 global fall.
Wheat prices slumped by Tk57 per kilogram in the global market, but it declined only Tk7-8 per kg in Khatunganj.
A Tk5 per kg fall in local wholesale sugar rate is close to the global market trend, but maize prices decreased by only Tk3 per kg compared to a Tk21 fall in the last two months in the global market.
Bottled soybean oil now costs Tk199 per kg.
Edible oil prices were raised in February on crop failures and supply crunch even before the Russia-Ukraine war broke out. In Bangladesh, soybean oil price increased to Tk168 per kg.
Commerce Minister Tipu Munshi then argued local traders could not be pressured to lower prices if international market prices did not decline. The price of per kg bottled soybean oil increased by Tk53 in three phases from February to June.
Following the global price drop, it saw a Tk14 price reduction in two phases - the latest cut was Tk6 per litre on 22 June.
The price of packaged flour has gone up to Tk54-55 per kg from Tk40-45 per kg since the start of the Russia-Ukraine war.
According to TCB's market analysis, flour has been selling at these prices for more than two months, over 52% up from Tk32-35 per kg at the same time last year.
A packet of sugar weighing one kg now costs more than Tk88. The government fixed its price at Tk75 in October 2021 and did not nothing about its price hike after the Russia-Ukraine war.
The commerce ministry is silent even today when the global sugar price is falling.
Who is to blame?
While consumers at the retail market are still paying pre-war high prices of almost all food items – traders, importers and millers are pointing fingers at each other.
Traders allege that the market is controlled by a handful of importers.
Importers say most products now available in the market were imported at higher prices. And, the lower priced items have just started to come in from the international market.
Prices of all essential commodities will further come down once all the supplies booked at lower prices hit the market, they note.
Wholesalers complain that prices of most products in the domestic wholesale market have been declining for the past one month, but there are no impacts of such falls in the retail market yet.
They blame importers for slow and inadequate responses in the local market while global prices fall.
Aman Ullah, a consumer goods trader from Khatunganj, told The Business Standard, "Prices of edible oil and wheat have dropped in the global market over the last one month, but price drops that we see in our domestic market are not proportionate."
Basically, there is a monopoly of importers controlling the market with no supervision on the part of the government, he also said.
Abul Bashar Chowdhury, chairman of BSM Group, a consumer goods importer, said consumer goods saw a sharp fall in prices over the last two weeks. Prices of some products have plunged so low that importers now have to sell at losses.
"We think packaged goods suppliers will also bring down prices of their products in line with price falls in the wholesale market," he also said.
Amitabh Chakraborty, an adviser to City Group, a consumer goods manufacturer, said it is true that essential goods prices have come down in the global market, but at the same time, prices of fuel oil and dollar rates have marked a rise.
"I hope the agencies concerned, including the commerce ministry will meet with importers and consumer goods companies and fix the prices at the retail level," he noted.
Trade body leaders have their point too.
Mahbubul Alam, president at the Chattogram Chamber of Commerce and Industry, said prices of many products in the world market have started falling. But, it will take some time to have its impact on the domestic market. Because neither importers nor traders want to sell products at losses.
Importers and relevant agencies need to work together to adjust domestic market prices in keeping with the international market, he added.