Income Decreases, Consumption Expenditures Increase in BD

The income sources of most of the people have been dwindled due to the ongoing Covid-19 situation in Bangladesh. On the contrary, the cost of living has increased at a significant rate as the prices of daily commodities and services have raised up.

At a press conference organized by the Consumers Association of Bangladesh (CAB) on Wednesday (June 18th), it was said that the cost of living in the country had risen by 6.88 percent which is the highest in the last three years. During this time, the price of various products and services has increased by 6.31 percent.

Although the cost of living of the people of the country has been steadily increasing in the last few years, the income has not increased in the same way. As a result, middle and lower-middle-class people are struggling to meet their living expenses. The most affected are the low-income people living in different cities including the capital Dhaka.

Many are breaking down their savings and meeting their daily needs. Those who do not have savings are being discombobulated to meet the cost of living. At present, there are no signs of dropping commodity prices.

Due to the lockdown, shops and shopping malls, public transport and other businesses have been closed, reducing the income of workers in these sectors. Many have returned to the village. The public transport sector was closed for a long time. As a result, people have had to travel in alternative vehicles with higher fares. Due to this, the subsidiary expenses have also increased.

Coronavirus pandemic has also reduced the scope of work for contract workers. Among them are the port workers, ghat workers, and housemaids. They used to send a part of their income to the village but now they can't. This has reduced the flow of money into the rural economy.

According to the Bangladesh Bureau of Statistics, the number of goods and services that could be obtained with Tk 277 in March last year, that amount cost Tk 292 last March. People had to spend more than Tk 15 to buy the same product and service by this timeframe. Expenditure has increased by 5.47 percent as a percentage.

Food prices have risen the most during that period. In March last year, the number of food products that could be obtained with Tk 301, the same product cost Tk 318 in the last March.

Expenditure on non-food products has also increased. The same amount of non-food products that were available at Tk 246 in March last year is now needing to spend Tk 259. People have to pay an extra Tk 13. The prices of common food items are usually lower in rural areas and higher in urban areas.

But in recent times, the prices of food items have gone up in rural areas. The growth in the city is relatively low. This has happened due to a fault in the supply system, the concerned said. Expenditure on transport increased by 9.89 percent, health care by 7.65 percent, and other goods and services by 13.65 percent in March this year as compared to March last year.

Increasing the prices of these services and products has increased the cost of people. As a result, most of the people of the country are in a financial crisis. The condition of people with limited income has reached such a level that they are not able to go to the doctor in time even in case of emergency.

Economists say the current state of the middle class may be tolerable. But if the stalemate is prolonged, they will be in the most danger. According to them, the country has adequate food stocks. However, the distribution system is very bad. And the government does not have any statistics on the middle class. As a result, it is very difficult to reach them with food assistance.

According to a research report of Bangladesh Economic Association's President Dr. Abul Barkat, before the first lockdown announced by the government to prevent coronavirus, the poor were 20 percent, the middle class 60 percent, and the rich 10 percent of the total population. After the lockdown, the poverty rate has risen to 40 percent, the middle class to 50 percent, and the rich to 10 percent. In other words, the rate of wealth remains unchanged at 10 percent even in the coronavirus stagnant. But the income of the middle class has decreased by 20 percent and they have gone into the poverty line. As a result, the middle-class rate has decreased by 20 percent, the poverty rate has increased from 20 percent to 40 percent.

A prominent economist said Dr. Zaid Bakht said that if the supply of any part of the economy is disrupted, its negative impact will be felt in almost all sectors. As the coronavirus's effects have been prolonged, its negative effects have begun to be felt in all sectors. So far the economy has dealt with the situation with its tolerance. But if it is prolonged, the crisis will escalate.

Many say that due to lack of surveillance and market management, the common people were being sacrificed for the profit of traders. The market is losing control without the body of the concerned organization. Market management is being hit by traders' syndicates and anarchy. Unscrupulous traders could not be restrained even in the various activities of the law enforcement agencies.

Negative consumer sentiment is also partly responsible for the uncontrolled market. When the price of any commodity goes up at an abnormal rate, then the consumer assumes that the price has gone down. Even if the 'increased price' is fixed, consumers assume that the price has come down! In this way, the increased price remains a reality in the future and people have to pay the price.

In addition to restoring institutional good governance to address the problem, experts have suggested coordinating the supply and demand of products in the market. The economist Dr. Zahid Hussain said, "If the supply chain can function properly and we can manage the demand in line with our production capacity, then inflation will be under control."