Imported essentials now made costlier

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Saturday, 04 February 2012

Author / Source : MD MONIRUL ALAM

DHAKA, FEB 3: The Taka's continued fall against the US dollar has kept import costs high for essential items, fuelling further inflation in the domestic market, leading importers told The Independent.
The depreciation has put pressure on importers, who have not been able to jack up prices enough to offset costs, keeping affordability in mind. The Taka has depreciated by more than 20 per cent, against the US dollar, in just one year between January 2011 and January 2012, according to statistics published by Bangladesh Bank (BB).
On January 3, 2011, the buy and sell rates stood at Tk. 70.93 and Tk. 70.95, respectively, for one US dollar. Whereas, on January 31, 2012, the inter-bank exchange rates, for one US dollar, hovered around Tk. 85.55 and Tk. 86.25. As a result, the price of one US dollar has increased by Tk. 15.30, in just a single year.
The fall in price of Taka has hit importers of milk-powder, crude soya bean oil, and computer hardware and accessories, especially hard.
According to December 2011 data, obtained from trade sources, import costs were up 25 per cent for milk-powder, widely known as baby feed; 24 per cent for crude soya bean oil; and over 20 per cent for computer hardware and accessories.

After deducting the impact of price hikes in international markets, the actual rise in import costs, after factoring in Taka’s depreciation, stands at 10 to 13 per cent for milk-powder, 18 per cent for crude soya bean oil, and 20 per cent for computer equipment.
Talking to The Independent, Naquib Khan, the corporate affairs director at Nestle, said that the total increase in import costs stood at 25 per cent, nearly half of which was due to rising prices in international markets.
“Due to the depreciation of Taka, import costs rose by 10 to 13 percent, as of end-December. However, for the domestic market, we could hike prices by only 10 per cent, to maintain affordability for consumers,” Khan said.
From January, the price of one 400gm container of Lactogen, the main product from the Nestle stable, has increased to Tk. 500, instead of the previous Tk. 450, he said.
He said that all milk-powder importers are facing similar rises in import costs.
Biswajit Saha, general manager of Citi Group, said that import costs for crude soya bean oil have increased by 24 per cent, at a time when price of the commodity has actually gone down in international markets. According to Saha, depreciation of Taka, alone, accounted for two-third of this hike in import costs.
He attributed the rest to increased lending rates, as importers, often, have to borrow from banks, to pay for imports.
“Though the price per metric tonne of crude soya bean oil declined by nearly 2 per cent, from USD 1,250 to USD 1,220, in the international markets, domestic factors, such as, currency depreciation, and hike in interest rates, resulted in rising import costs,” he said.
As a result, prices in the domestic market had to be changed, Saha said, adding that retail price of a one-litre pet bottle has now increased to Tk. 126, from the earlier Tk. 115.
Meanwhile, Mustafa Jabbar, former president of Bangladesh Computer Society, said that prices of computer accessories have remained more-or-less stable for the past one year, except for those of hardware.
“But, import costs have increased by 20 per cent due to the depreciation of Taka. In the domestic market, prices have been hiked by almost 10 per cent, as of now. But, they will likely be hiked further, to realise increased import costs,” he said.
Jabber said that only hardware prices have gone up in international markets, following the massive flood in Thailand in late 2011. Thailand is one of the largest hardware manufacturers in the world.
He, however, said the rise in hardware prices is likely to be temporary, and are expected to ease soon.