Tackling Inflation: Slash Price , Launch New Scope

Amid inflation, slashing prices is a must, To save tiny savings, launch investment scope just.

Egg prices remain an issue in dealing with rising price levels. Despite increasing surveillance, prices are not lowered. For two days, big distributors stopped selling eggs as govt fixed prices for eggs at various stages. News reports say unusual precipitation hampered poultry farming across the country, causing shortfall of 5/8 million eggs daily. This is one of the reasons for unusual hike in egg prices. However, I disagree with the view that corporate groups bag huge profit from the unusual hike in poultry item prices. Swollen retained earnings presented as proof of foul play,but the profit before tax clearly shows size of profit corporate group usually generates¹.It is not true that retained earnings show earnings after dividends. Rather it is reserved for paying dividends or reinvestment in the future at the will of corporation.

There is an increasing tendency to blame cartel/syndicate for the price hike in kitchen market. Back in March and August in 2023 in two pieces titled "Poultry Meat Gets Costlier" and "Poultry Market Becomes Volatile Again", I highlighted that there are too many farms and punishment is immediate in case of forming cartel in the poultry market². Bangladesh Competition Commission fined two big farms and govt allowed import of Indian eggs. Then what is the point of forming cartel?

But there are signs of unholy alliance in the input market. Govt should probe on that. Like telecom business, govt may intervene in hatchery and feed production business to supply feed and chick to marginalized poultry farmers who find the feed prices too high.

Govt also needs to do a lot of things for hedging tiny savings against inflation. In our country, people do not have enough things to hedge their tiny savings against inflation except depositing money into bank accounts where interest rate is still lower than the true inflation rate. Govt is planning to allow ordinary people's investment into treasury bills which offer interest rate up to 12%. Problem is such investment requires minimum investment of Taka 100000 and it does not allow investment into treasury bills with 91-day or 180-day maturity. If small investors with Taka 500/1000/5000 are allowed to invest into such treasury bills, it would do a great help to them against inflation during the time of high price levels.

Similarly, ordinary people and micro savers' participation can be allowed into commodity exchange market where they can buy/sell futures ,options of commodities through banks/MFS. At the same time, foreign currency regulations act needs to be updated so that individuals can increase their foreign currency holdings in case of free fall of Taka or high inflation. Currently, the act forbids holding of foreign currency by individuals without valid documentation.

Lowering the price levels is a must step to give comfort from scorching heat of inflation. At the same time, it is no less important to protect peoples' savings.

References:

1. "Dim ,Murgi Beche Fule Fepe Utchhey Boro Utpadak Protishthangulo(Big Producers Get Bigger By Selling Eggs,Poultry) ",Mehedi Hasan ,Bonikbarta, October 16,2024. Link: https://bonikbarta.com/bangladesh/dLzn4ol50hNoEqfH
2. "Poultry Market Becomes Volatile Again",Rezaul Hoque, August 17,2023,https://hoquestake.blogspot.com.Link : https://hoquestake.blogspot.com/2023/08/poultry-market-becomes-volatile-again.html?m=1