Policy backup for safety nets from inflation

The food grain stock management could also be improved in order to tackle inflation

Bangladesh has been undergoing from 5per cent to 7per cent inflation rate for 1995. Its inflationary rate as measures by consumer’s price index has crept and reached the highest 6.12per cent on September 2017.Such inflation rate is moderate for our country because Bangladesh wants to attain 7.5 percent GDP growth, it is required to be inflation in between 6.5 percent and 2.5 percent safely cohesion. But when its impact on poor people of the country were to be done adversely then policy backup needs to keep inflation rate moderate for poor people subsistence.

The latest figure shows that food inflation increased 55 basis points to hit 7.87 percent and still is continuing to creep. Onion import and accommodating shock on Broro paddy production have increased Bangladeshi’s food inflation . Non-food inflation has also increased, although not by same amount.

 In macroeconomics, inflation occurs when, too much money chasing too few goods or demand is growing faster than supply an increased cost of production and uncontrollable shocks over economy for which the purchasing power of money income decreases due to a persistent increase in the general price level of goods and services .The upward pressure of price level that relates to economic as well as non-economic occurrence such as syndicate and extortion.

Recently aggregate demand exceeds aggregate supply due to the bad harvest season has been wrapped throughout the year.   Strong economic zone of hoar area has been affected by unbearable flash flood. Approximately 1, 00,000 hectares of Boro has gone under water in flash flood on middle of this year. Moreover north-western water-lands destroyed more than 2, 00,000 hectares of mature Boro paddy. The country may lose around 800,000 tonnes of Boro this year. Onion’s price due to less import and bad harvest in Indian’s onions production has increased 71 percent within last few weeks. Onion is necessity substance is needed for cooking everyday which remains the demand of onion same. As a result this shortage has definitely created problems in current rice price hikes. Such uncontrollable accommodating shock or external shock has reduced the aggregate supply and got took place stagflation (occurrence of both stagnation and inflation). Such food price hikes of necessary goods impact immensely on the overall economy.

Notwithstanding, the collusion of supplier has made resistance over the as required rice’s supply and onion’s supply during shortage of rice and onion supply and creates artificial malaises. Usually when supplier can foresight external shock that reduces the particular commodity’s supply then  they used to store the supply of shortage goods and augment the price of saleable goods to maximize their profits. This might be playing a role pushing the price up all time as well as recent time also.

Consequently People of the country are experiencing the soaring up price level in their necessary goods every day. In addition all other nominal factors of income will lead to increase in cost of all factors due to change in one price level also is intriguing change in price spiral level again and again. This unpredictable price increased hampers living standard of the general people and enlarges the pangs in their life.

From those with fixed income category such as government and non-government employees, industrial workers, the unemployed and the people with limited income, faces more damage as they can’t protect their real income. Fixed income has been adversely affected and can’t manage their everyday demand as purchasing power has reduced. Cost of living increases unanticipated way consequently low income families such as who have already been experiencing squeezing of their purchasing capacity for high price of rice and onion can’t afford their living cost due further increase in persistent rice price level. This has forced a section of the population to drop below the poverty line.

Inflation may be caused of bearing anticipated and unanticipated cost. People either can be prepared accordingly or not. Bangladesh has been following the mixed balance of payment system from the beginning. such food Inflation creates an effect on balance of payment by paying a recession in fixed exchange rate and creates vicious cycle of further inflation occur in flexible exchange rate because of trade deficit has increased with rest of the world significantly. So its need to keep stuck a moderate food inflation rate of policy makers and government.

Suppose the Bangladesh government acknowledges the conventional wisdom and focuses on paves to protect the poor from the impact of higher domestic food price. Is the government ready? In particular, do safety net program exist, and can they be easily expanded? Does the government have the fiscal space to accommodate the additional resources needed to fund the safety net?

Unfortunately, the answer to each of these is reverberating “no”

We welcome to government to decrease the import tariff on the rice to meet the shortage of rice supply. This is despite a number of successful steps taken by Ministry of food, safety nets for those affected population in Bangladesh are inadequate. So if safety nets are to be use in future episodes of rising food prices, they need to be put in place now.

Such safety nets sustain along the long run trend if we maintain the higher level of production, there must be some technological advancement. Government should take immediate steps to mitigate unavoidable inundate persuasiveness and get incentive the farmer to produce more agricultural food by subsidised. Privatisation should be needed in import substitution goods that makes competitiveness over the market and increase the aggregate supply.  Premeditation about the necessity goods import like onion would be taken in peak harvest period and try to move from import trough cultivate domestically to afford the food during any sudden shock. . Our food grain stock management could also be improved in order to tackle inflation. Due to inadequate storage capacity and technology, high stocks have led to high wastages. Government would depend on non-government food grain stock management to meet safety nets but which assist them to make syndicate. Lastly price surveillance authority should strictly be applied so that the syndicate or artificial shortage of food gets never occurred.

The current government has taken a number of positive steps in keeping food prices as well as general non-food prices under control. These measures need to further strengthened and enforced in order to solve the policy loopholes that still exist. This will help to keep the overall inflationary environment in the country under control.

    The writer is a freelancer

 

Policy backup for safety nets from inflation

The food grain stock management could also be improved in order to tackle inflation

Bangladesh has been undergoing from 5per cent to 7per cent inflation rate for 1995. Its inflationary rate as measures by consumers price index has crept and reached the highest 6.12per cent on September 2017.Such inflation rate is moderate for our country because Bangladesh wants to attain 7.5 percent GDP growth, it is required to be inflation in between 6.5 percent and 2.5 percent safely cohesion. But when its impact on poor people of the country were to be done adversely then policy backup needs to keep inflation rate moderate for poor people subsistence. The latest figure shows that food inflation increased 55 basis points to hit 7.87 percent and still is continuing to creep. Onion import and accommodating shock on Broro paddy production have increased Bangladeshis food inflation . Non-food inflation has also increased, although not by same amount. In macroeconomics, inflation occurs when, too much money chasing too few goods or demand is growing faster than supply an increased cost of production and uncontrollable shocks over economy for which the purchasing power of money income decreases due to a persistent increase in the general price level of goods and services .The upward pressure of price level that relates to economic as well as non-economic occurrence such as syndicate and extortion. Recently aggregate demand exceeds aggregate supply due to the bad harvest season has been wrapped throughout the year. Strong economic zone of hoar area has been affected by unbearable flash flood. Approximately 1, 00,000 hectares of Boro has gone under water in flash flood on middle of this year. Moreover north-western water-lands destroyed more than 2, 00,000 hectares of mature Boro paddy. The country may lose around 800,000 tonnes of Boro this year. Onions price due to less import and bad harvest in Indians onions production has increased 71 percent within last few weeks. Onion is necessity substance is needed for cooking everyday which remains the demand of onion same. As a result this shortage has definitely created problems in current rice price hikes. Such uncontrollable accommodating shock or external shock has reduced the aggregate supply and got took place stagflation (occurrence of both stagnation and inflation). Such food price hikes of necessary goods impact immensely on the overall economy. Notwithstanding, the collusion of supplier has made resistance over the as required rices supply and onions supply during shortage of rice and onion supply and creates artificial malaises. Usually when supplier can foresight external shock that reduces the particular commoditys supply then they used to store the supply of shortage goods and augment the price of saleable goods to maximize their profits. This might be playing a role pushing the price up all time as well as recent time also. Consequently People of the country are experiencing the soaring up price level in their necessary goods every day. In addition all other nominal factors of income will lead to increase in cost of all factors due to change in one price level also is intriguing change in price spiral level again and again. This unpredictable price increased hampers living standard of the general people and enlarges the pangs in their life. From those with fixed income category such as government and non-government employees, industrial workers, the unemployed and the people with limited income, faces more damage as they cant protect their real income. Fixed income has been adversely affected and cant manage their everyday demand as purchasing power has reduced. Cost of living increases unanticipated way consequently low income families such as who have already been experiencing squeezing of their purchasing capacity for high price of rice and onion cant afford their living cost due further increase in persistent rice price level. This has forced a section of the population to drop below the poverty line. Inflation may be caused of bearing anticipated and unanticipated cost. People either can be prepared accordingly or not. Bangladesh has been following the mixed balance of payment system from the beginning. such food Inflation creates an effect on balance of payment by paying a recession in fixed exchange rate and creates vicious cycle of further inflation occur in flexible exchange rate because of trade deficit has increased with rest of the world significantly. So its need to keep stuck a moderate food inflation rate of policy makers and government. Suppose the Bangladesh government acknowledges the conventional wisdom and focuses on paves to protect the poor from the impact of higher domestic food price. Is the government ready? In particular, do safety net program exist, and can they be easily expanded? Does the government have the fiscal space to accommodate the additional resources needed to fund the safety net? Unfortunately, the answer to each of these is reverberating no We welcome to government to decrease the import tariff on the rice to meet the shortage of rice supply. This is despite a number of successful steps taken by Ministry of food, safety nets for those affected population in Bangladesh are inadequate. So if safety nets are to be use in future episodes of rising food prices, they need to be put in place now. Such safety nets sustain along the long run trend if we maintain the higher level of production, there must be some technological advancement. Government should take immediate steps to mitigate unavoidable inundate persuasiveness and get incentive the farmer to produce more agricultural food by subsidised. Privatisation should be needed in import substitution goods that makes competitiveness over the market and increase the aggregate supply. Premeditation about the necessity goods import like onion would be taken in peak harvest period and try to move from import trough cultivate domestically to afford the food during any sudden shock. . Our food grain stock management could also be improved in order to tackle inflation. Due to inadequate storage capacity and technology, high stocks have led to high wastages. Government would depend on non-government food grain stock management to meet safety nets but which assist them to make syndicate. Lastly price surveillance authority should strictly be applied so that the syndicate or artificial shortage of food gets never occurred. The current government has taken a number of positive steps in keeping food prices as well as general non-food prices under control. These measures need to further strengthened and enforced in order to solve the policy loopholes that still exist. This will help to keep the overall inflationary environment in the country under control. The writer is a freelancer