Prices of bakery products are set to rise up to 20 per cent while some low-priced items become smaller in size without a change in their sticker rate through shrinkflation as bakers cite spikes in ingredient costs.
Prices of flour, sugar, cooking oil, energy and other inputs of the ready-to-eat foodstuffs, they say about the fallout from wayward inflation.
Bangladesh Bread, Biscuit and Confectionery Manufacturers Association had said the price adjustment would begin on Saturday. However, most shops in Dhaka did not receive bakery products at the new prices on Saturday, as association president Mohammad Jalal Uddin said the new prices would actually hit the market from Sunday.
The adjustment will combine 'higher prices and shrinkflation' -- reducing the quantity or weight of a product while keeping its price unchanged.
For example, a Tk10 bun weighing about 40 grams could lose around 5.0 grams while retaining the price at Tk10. A 400-gram loaf selling for Tk50-Tk60 could be reduced to 320-350 grams if its price is kept unchanged. If bakeries retain the 400-gram weight, the price could instead increase by Tk5-Tk10.
Jalal Uddin said the association had not formally announced a uniform 20-percent increase but that bakery owners collectively decided to make a modest adjustment in response to rising production costs. "We have never said prices will rise by 20 per cent. Given the business reality, owners have collectively decided on a modest adjustment," he said.
But the increase would be up to 20 per cent.
Products currently selling for Tk40-Tk50 could become Tk10-Tk15 more expensive, while a Tk12 cake could rise to Tk15, he said.
The cheapest products, particularly those consumed by low-income workers, would generally retain their prices but be reduced in size.
The association said production costs had risen by 20 per cent to 30 per cent over the past six months because of higher raw-material and energy costs.
Jalal said the price of flour increased sharply. A sack that cost around Tk2,500 previously was selling for about Tk3,200, with another Tk300 increase reported on Saturday. Sugar and cooking- oil prices have also risen.
The association's figures show that refined-flour price has increased from around Tk3,000 to Tk5,600 a sack, while the price of a drum of cooking oil has risen from Tk25,000 to Tk36,000.
Bakeries are also facing higher energy costs because of unreliable pipeline gas and electricity supplies. Many have been forced to use LPG, while power shortages disrupt production and leave workers idle.
Jalal said a bakery that previously used five sacks of flour a day was now operating with around three sacks because of the difficulties.
"We are struggling to survive," he said, adding that bakeries had little room to absorb further increases in production costs.
The squeeze is also being felt by small sellers who buy bakery products wholesale and sell them from roadside stalls or vans.
Kashem, a tea-stall owner in West Rajabazar, says his supplier has warned him that bakery products would become more expensive. He fears that higher prices would reduce demand among customers who buy buns with tea.
Nadim, who sells dry cakes, biscuits and other bakery products from a van in New Market, has said his profit margin was already small.
"If bakeries raise wholesale prices, I will have to follow. Then people may not want to buy from us. We will suffer badly," he says.
Some consumers and retailers, however, question whether bakeries should raise prices by as much as proposed.
Nizam, a tea-stall owner in Paltan, estimated that a 50-gram bun selling for Tk10 costs about Tk2.50 to produce and is supplied by bakeries for around Tk5.
"They are still making a 50-percent margin. So why should the price go up?" he questions.
Meanwhile, the crisis is not confined to small, hand-operated bakeries. Shafiqur Rahman Bhuiyan, president of Bangladesh Auto Biscuit and Bread Manufacturers Association, says large automated factories are also facing severe pressure from gas and electricity shortages and rising raw-material costs.
He says major manufacturers are continuing production despite losses to protect thousands of jobs.
"We are operating at a loss because we are an industry. Thousands of our workers would become unemployed if factories shut down," Bhuiyan told the FE writer.
He said one factory had remained closed continuously for three days the previous week because of a lack of gas.
"We do not know how long we can continue with current prices, maybe, forced to increase price as well."
Bangladesh has around 7,000 small bakeries, including more than 700 in Dhaka, according to the association. The sector is estimated to provide direct or indirect livelihoods to around two million people.
Jalal warns that if raw-material and energy costs continue to rise, bakeries may soon have little scope to raise retail prices further.
The latest adjustment comes after a major bakery price increase in June 2022, when prices of bread, biscuits and cakes rose by between 20 per cent and 40 per cent.
