Consumers feel the heat of war everywhere

Nearly a year ago when President Vladimir Putin launched a full-scale invasion of Ukraine, many had thought that the war would end soon. 

It hasn't. The war has prolonged and it has left scars in Ukraine and affected the lives and livelihoods of people in almost every corner of the world.

The people of Bangladesh were not spared as well. Every family is feeling the pinch of the conflict, which is taking place thousands of miles away from the delta.

"The effect of the war is visible in every nook and cranny of the country," said Jalal Uddin Ahmed, a private sector employee.

"When I commute in a bus and the ticket issuer asks for a higher fare than I used to pay earlier, I can feel the heat of the war on my wallet."

Ahmed is the breadwinner of a four-member family living in Dhaka for 34 years.

In the past one year since the war broke out, the 55-year man saw the overall cost of living of his family go up by more than 50 per cent.

"The prices of gas, power and fuel would have been stable had there been no war."

Ahmed's plight echoes the struggle confronting millions of his countrymen for the escalated cost of living as reflected by the sustained high inflation, which stood at 8.57 per cent in January.

From cooking gas, grains, edible oil, pulses, sugar, home and personal care products to electricity and papers, all registered an increase in prices over the past year.

And the Russia-Ukraine war is responsible for a large part of the spike, transmitting through higher import costs for petroleum, gas, commodities and many industrial raw materials.

Global food, fuel, and fertiliser prices have risen rapidly in recent months, driven in large part by the fallout from the ongoing war in Ukraine and the sanctions imposed on Russia. Other factors, such as export bans, have also contributed to rising prices, said the International Food Policy Research Institute (IFPRI) in a report in July.

Wheat, the second most-consumed grain in Bangladesh after rice, witnessed a record surge in prices. About 80 per cent of the grain supply comes from imports.

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"Since the wheat grain supply is highly dependent on imports, we expect changes in world prices to have a relatively large effect on the domestic prices of wheat," said the report.

Its prediction was spot on.

In January this year, the prices of wheat flour surged to a record high of Tk 62.26 per kilogramme in Dhaka, up from Tk 34 a year ago, according to prices data compiled by the Food and Agriculture Organisation.

A 25 per cent depreciation of the taka against the US dollar and banks' lack of interest in opening letters of credit to facilitate imports for the shortage of the American greenback contributed to the fuelling of the wheat price.

"One year ago, I used to buy at least four kgs of flour in one go when one kg of flour cost Tk 30 to Tk 35. Now I dare not to buy a single kg of flour," said Mohammad Shahidul, a rickshaw-puller in the capital.

Due to the dearer rice, the 35-year-old used to purchase flour as a substitute.

"Now its price has gone out of my reach," he said.

Recently, Shahidul sent his four-member family back to his village home in Naogaon, a northern district, as he failed to afford the cost in the city.

Golam Moazzem, research director of the Centre for Policy Dialogue, says the war has affected developing economies through many channels.

The major impact came from the spike in the price of petroleum and gas after European nations went to the international market to buy fuel amid the cut in supply by Russia and the sanctions imposed by the European Union.

"This has directly impacted Bangladesh," he said.

The government has raised the prices of fuel, electricity, and gas to reduce the pressure of subsidies on the state exchequer, which, in turn, has pushed up the production cost of factories. The producers have been forced to pass the added costs onto customers to keep their heads above water. 

The higher cost of the dollar is another major factor behind the increased price of imported items.

"As import cost rises, consumers have to pay more to get all sorts of items ranging from foods, medicines, soaps, cosmetics to papers," Moazzem said.

The economist says the prices of rice have been high owing to costlier wheat flour. "The consumption of rice has increased as many people have switched from wheat for the spike in prices."

Shahidul said the price of soap has increased by Tk 15 to Tk 20 apiece. "To cook foods, we need edible oil, but its price is also very high," he said.

Bangladesh banks on external sources to meet the majority of its requirement for edible oils.

Cereals and edible oils make up 14 per cent of the total value of household consumption in Bangladesh, and about one-fourth of the total food expenditure, said the IFPRI report.

Consumption fell in both rural and urban households. National consumption spending, including the value of home consumption, declined by 4.7 per cent, according to the report. 

"Rural households are hit twice, by rising prices and falling income, while the dominant effect for urban households is higher food and fuel prices."

Ghulam Rahman, president of the Consumers Association of Bangladesh, said consumers are feeling the pinch of the war for almost all products.

"The war has also become an excuse for greedy businessmen to make extra bucks. And consumers are suffering for that."

"Many families have had to reduce consumption and this has impacted nutrition," Moazzem said.

Ahmed says his income has increased over the last one year, but the hike is not enough to bear the additional expenses.

"It is a relief that my salary has gone up. However, I know a number of people whose income has not risen. Besides, many don't get salaries regularly. Their situation is worse than me."

"The war needs to come to an end immediately. If it ends, it will be good for all of us."