The government raised the retail prices of soybean and palm oil yesterday amid concerns that this would raise the cost of living.

The price of each litre of bottled soybean oil is now Tk 189, a Tk 14 increase, and non-bottled soybean and palm oil is Tk 169, a Tk 12 increase.

The edible oil prices have risen as the government increased VAT on its import from 5 percent to 15 percent.

Inflation increased slightly in March, driven by a rise in non-food prices. However, it had declined in the previous three months.

Overall inflation stood at 9.35 percent in March, up from 9.32 percent in February, according to data released by the Bangladesh Bureau of Statistics.

Following a meeting with oil refiners yesterday, Commerce Adviser Sheikh Bashir Uddin told reporters at the Secretariat that the rising oil prices would pose challenges for consumers.

He added that the rise in soybean oil prices would be temporary.

The new prices correspond to the international market rates, he said.

Meanwhile, an analysis of World Bank commodities price data shows that the price of soybean oil was $1,101 per tonne in December last year and $1,040 in January this year.

Although it slightly increased in February, it fell again in March to $1,005 per tonne.

The adviser also said that with improved supply and increased competition in the market, it will be possible to bring down the prices soon.

Bashir said the government had been forgoing around Tk 550 crore in revenue from edible oil each month. In the months leading up to Ramadan, nearly Tk 2,000 crore revenue was waived.

However, such revenue concessions are hard to continue, he said.

On April 13, Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association announced a hike in oil prices.

Refiners had been pushing for price revision as the benefit of reduced VAT expired on March 31.

In the wake of price volatility and supply shortage of edible oil, the National Board of Revenue last year slashed VAT at the import stage to 5 percent and exempted the indirect tax on local refiners and traders.

The last price hike of bottled soybean oil took place on December 9 last year, when the price was set at Tk 175 per litre.

Since then, the government took several steps, but the country's edible oil market had not stabilised.

Most of the time, consumers had to buy edible oil at prices higher than the government-set rate.

Even though the government officially raised prices yesterday, wholesale markets in Dhaka and Chattogram had already been selling the product at nearly the same price for the past 10 days.

The adviser also said that to boost the supply of edible oil in the local market, two oil companies have already started production.

Another 6–7 companies are expected to begin production very soon, he said.

Shafiul Ather Taslim, director for finance and operations at TK Group, a leading importer and commodity processor, told The Daily Star that the price should have been increased by Tk 21 per litre.

"So, we will now have to provide a subsidy of Tk 7 per litre," he said, adding, "The price adjustment was made after extensive discussions with the government.

In the global market, prices have remained almost steady since January, Taslim added.

SM Nazer Hossain, vice president of the Consumers Association of Bangladesh, said over the past two to three years, the cost of living increased.

Although the government has taken several measures, buyers have benefited in very few cases, he said, adding that now, the hike in edible oil prices will further worsen their hardship.