Editorial
Fuel price increase
A trigger for inflation and higher costs
The government's decision to go for an almost across-the-board fuel price hike, for the fifth time during last four years of its tenure, has raised questions about the justification of the move from different quarters. It has already drawn flak from the consumers' association, transporters, manufacturers and farmers in varying degrees. Economists have also been critical of the hikes that too by a significant margin over the previous rates.
First and foremost, it is a hard option that the government has taken without sufficient thought having been apparently given into its possible ramifications. The public hearing that the BERC held was like going through the motions because the government's mind had already been made up on the issue.
From purely economic considerations, it appears to have been a misstep and to an extent unwarranted as well. Even allowing for the fact that subsidies needed to be cut back on, the latest spate of increases should have been avoided with a greater focus given on better management. The underlying reason seems to have been to meet an IMF conditionality. But in view of the final year of the government's tenure such a decision was expected to have been taken with due circumspection and deliberation.
More to the point, the rate of inflation was just about to be in decline and also the international oil prices are reportedly falling.
In particular, the increase in diesel and kerosene prices by Tk 7 per litre which by a single stroke has been a good 11.5 percent increase over the previous rate is a little too harsh. High cost of diesel could affect boro production that constitutes the bulk of food output in the country.
As a matter of fact, rising prices of fuel have always triggered price and inflationary pressures which cannot bode well for the consumers who actually have to take brunt in the final analysis.
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