At a time when the price of sugar is falling in the international market, the price of sugar in Bangladesh increased by Tk150 per maund (37.32 kg) and sold at Tk90-95 per kg in the open market, over the last two weeks in Bangladesh.
In recent months, ever since fuel prices were increased by more than 50% in August, the price of almost everything has been skyrocketing. As people suffer, the staggering prices are often justified by pointing to international crises, like the war in Ukraine.
While the effect of the present international crisis is undeniable, what is also apparent is the business community's penchant for seeing an international crisis as an opportunity to hike prices of essentials.
According to a report by the Bangladesh Trade and Tariff Commission, the price of flour increased by 67% in the domestic market, when the price of wheat in the international market increased by only 8% in a year.
Likewise, the price of lentils increased by 29%-39% in the local market, despite a fall in price in the global market. Also, despite the falling price of steel scrap in the global market, rod prices increased in the domestic market.
The global soybean oil market is steady at present. The price of soybean oil in the international market is $1,500 per ton at present. Considering that, the maximum price per litre should be around Tk156.24. But in reality, domestic market prices range from Tk175 to Tk192 per litre.
The list, perhaps, could go on. Six banks had to apologise recently for selling the US dollar at an excessively high rate. Reputed national conglomerates were sued for hoarding in order to hike prices. Even state-run enterprises – by definition set up to protect people from price uncertainties – are not free from this malicious practice. For example, when fuel price was hiked by 50%, its global price actually came down to around $95 per barrel.
Why is this the culture in Bangladesh? Why, immediately after the announcement of a price rise in the international market does the domestic market set the prices high, even though the commodities had been imported at an earlier price?
Meanwhile, when prices are readjusted in the international market, local prices refuse to come down at the same pace.
"The international market price is an excuse," said Anu Muhammad, a professor of economics at Jahangirnagar University.
"The logic that the price increased here because it increased in the international market is wrong from the beginning. The prices of many products increased here, that don't have any relation to the international market. For example, the fuel price hike had no logic at all. Taking that as an excuse, other products' prices have increased."
"Generally, the government is supposed to think through the consequences of such hikes - like who will be benefited and who will be hurt," he said, adding that the attitude of the business community in general will be to maximise profits.
"They will maximize profits given the chance. In some countries, these things are kept under control because the government plays a regulatory role there."
"There are institutions that follow and monitor the market. They control it when someone is making excess profits. Nothing like this exists in Bangladesh. The institutions here don't work, and the government doesn't have a headache about public interest. They are not accountable. As a result the business community gets a blank check. There is no end to greed here," Anu Muhammad added.
Economist Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh, however, finds the immediate hike in alignment with the international market and the delay in reducing prices rational.
"It is not like the prices are not adjusted when prices are reduced in the international market. It comes down, but it takes time," Ahsan Mansur said.
So why the delay?
According to this economist, when a trader imports a product, he opens the LC around 90 days in advance. "I bought the product, but the price has fallen. What would you do if you were a businessman? You will try to sell it at the previous price."
He said a trader will try, without necessarily being successful, to sell at the LC price because of the arrival of new shipment.
"But as long as the new shipment does not reach the market, the price remains high. This is business," he said.
"On the other hand, when the price abruptly increases, what will happen to the next shipment? The trader then hikes the booking price at that time. This is what we call opportunity cost in economics."
That the price doesn't fall immediately when it falls in the international market, but increases immediately, is called an asymmetric relationship in economics. It means the price will increase immediately, but reduce slowly.
"It is fully rational. And that is the way it should work," Ahsan Mansur said.
But Professor Anu Muhammad says, "When the market prices fall, they have no problem ignoring it, since no institutional mechanism is functioning to monitor this. It is not like the government is incapable, they are just unwilling."
While the culture of profiteering may make economic logic, the impact it has on people is nonetheless back-breaking. That is why ordinary people have a negative impression about businesses being exploitative in nature.
"It is not uncommon to see businesses in Muslim countries around the world announcing a special discount during Ramadan. In the West, there are special discounts during Christmas. In Bangladesh, on the other hand, the culture of profiteering becomes even more stronger during Ramadan. Where else did you see businesses increase prices of essentials, including the kitchen market, during a holy month?" a housewife asked this reporter during the last Ramadan.