The prices of key essential items are likely to remain stable during the upcoming holy month of Ramadan due to multiple government initiatives, according to a report released by the Bangladesh Trade and Tariff Commission (BTTC) on Sunday.
It stressed the need for intensifying market monitoring and overseeing the commodity-specific stock and supply situation of commodities like lentils and gram, in the domestic market as the global prices of the two Ramadan essentials went up recently.
The report, sent to the commerce ministry requesting follow up measures, analyses the local essentials market situation as part of the government's preparation for Ramadan and outlines necessary steps for the government.
Appreciating the report's import data and surplus of few items in the market, market insiders however pointed out that the analysis was based on information before the government's imposition of increased VAT on around 100 items. They thought the new VAT would directly or indirectly affect the essentials market during the holy month.
Since December 2024, the global prices of energy, non-energy commodities, food (oil and meals), other food items, raw materials, and fertilisers have shown a downward trend. However, food grains such as rice, maize, and barley have exhibited an upward trend, raising concerns.
The report also mentioned that a potential resolution to the Russia-Ukraine war could improve the global supply chain, which would likely normalise the availability of many imported products.
Consequently, the downward trend in international market prices is expected to positively impact the prices of import-dependent essential products in Bangladesh.
A decline in fertiliser and fuel oil prices is anticipated to lower production and supply costs for locally produced agricultural products.
However, the BTTC emphasised the need for maintaining stability in the exchange rate of US dollar and ensuring balanced fiscal and monetary policies to keep prices static. It also urged the Bangladesh Bank to take necessary measures in this regard.
The report focuses on the possibility of price reductions during Ramadan due to the falling international prices of edible oil and the reduction of duties and taxes on edible oil imports.
The government has exempted all duties and taxes on rice imports to address a decline in local rice production.
Traders have already opened letters of credit (LCs) to import approximately 0.475 million tonnes of rice. Around 0.30 million tonnes of refined and raw sugar would also be imported soon.
The report also says wheat imports increased to 3.0 million tonnes in July 1- January 5 period of the current financial year (FY '25) which was below 2.6 million tonnes in the corresponding period of last FY.
It says during the period from July 1, 2024, to January 5 of 2025, imports of certain key essential items, including palm oil, sugar, dates, and onions, decreased compared to the previous fiscal year.
However, imports of rice, wheat, soybean oil and seeds, and lentils increased significantly during the same period.
Vice President of the Consumers Association of Bangladesh (CAB), SM Nazer Hossain, has praised the report for revealing the actual import figures and surplus of products ahead of Ramadan.
However, he criticises it for not considering the recent developments, particularly the government's new VAT imposition.
"Over 100 products, services, and items have been subjected to higher VAT and taxes, which could directly or indirectly harm the essentials market," he says.
Under the new rules, businesses with a turnover of Tk 3.0 million to Tk 5.0 million will now be required to pay a turnover tax, whereas previously, the threshold ranged from Tk 5.0 million to Tk 30 million. This change is expected to raise prices significantly. Moreover, businesses with turnovers exceeding Tk 5.0 million will be levied a 15 per cent VAT on the sales of goods and services.
Mr Hossain warns that these measures might be counterproductive to the anticipated stability in the market during Ramadan and emphasised the need for the further impact assessment of these fiscal policies on essential commodities.
