To effectively combat inflation, the government must invest in enhanced transportation networks to ensure the timely delivery of food items, develop adequate storage facilities to minimize food spoilage and waste and streamline the supply chain ecosystem. This recommendation stems from a recent study conducted by the Dhaka Chamber of Commerce and Industry (DCCI).

The DCCI undertook this study to examine the dynamics of price fluctuations for essential commodities across their supply chains and to establish a mechanism for monitoring and controlling the volatile commodity market.

The research gathered insights from 600 respondents across 49 districts in eight divisions, focusing on 21 essential commodities, including 12 locally produced items, five imported goods, and four that are both imported and locally produced.

The findings were presented at a seminar titled "Food Inflation: An Analysis of Price Dynamics of Essential Commodities," held at the DCCI auditorium in Dhaka on Thursday. AKM Asaduzzaman Patwary, Executive Secretary of the Research and Development Department at DCCI, delivered the keynote address.

The study identified several factors contributing to rising commodity prices, including increased production costs, low supply, inefficient market mechanisms, high transportation expenses, market dominance by wholesalers, and limited bargaining power among producers. Additional factors influencing price fluctuations include artificial shortages, challenges in opening letters of credit, seasonal price variations, the depreciation of the taka, inefficiencies in the supply chain, inadequate storage facilities, and limited market access for producers.

A primary concern driving current food inflation is the lack of coordination among demand, production, and imports of essential products. Inefficiencies in the market system, information asymmetry, declining local production, and high transportation costs—along with the rising costs of fertilizers, seeds, oils, and pesticides—further exacerbate the situation.

During the seminar, DCCI President Ashraf Ahmed emphasized that despite the significant price gap between producers and consumers, producers are often not receiving fair compensation. He noted that indirect costs also contribute to rising prices, stating, "If we can reduce input costs in storage, transportation, and processing, we may see a decrease in overall prices." He further highlighted the substantial waste of perishable goods and advocated for processing as a viable solution to mitigate these losses.

The DCCI President underscored the critical need for accurate supply and demand data, as well as data analytics and assessment, to formulate effective policy guidelines.

Dr. Sayera Younus, Executive Director (Research) at Bangladesh Bank, noted that controlling inflation is the central bank's top priority at this time. Despite recent increases in policy rates, inflation has not decreased to the expected levels, primarily due to non-economic factors. "Additionally, external factors such as international market dynamics, rising exchange rates, and increased import costs also play a significant role in inflation," she remarked.

Saifuddin Ahmed, Joint Secretary of the Trade Support Measures Wing at the Ministry of Commerce, stressed the importance of market data analysis for developing appropriate policy guidelines. "We must conduct research to accurately assess demand, supply capacity, production capabilities, seasonal demands, and variations. Establishing an annual statistical 'product calendar' will facilitate the government's taxation processes for imported goods and other procedures," he added.