Sharp rise in wheat flour prices pinching consumers

Wheat flour is the latest food commodity that is becoming costlier day by day in Bangladesh inflicting consumers amid the onslaught of the coronavirus pandemic.

Just three months ago a packet of 2-kilogram flour (atta) was being sold at Tk 65 at retail level and now the price has shot up to Tk 80, meaning that the price has increased by over 23 percent, according to retailers.

For fine flour the price has gone up to Tk 110 for 2-kg packet, up from Tk 90 three months ago.

“Where will we go? How will we survive?” questioned Kanta Islam, a frustrated consumer at Dilu Road in New Eskaton, Dhaka.

She said prices of every essential food commodity, be it edible oil, sugar, rice, vegetables or chicken, has increased significantly in the last several months. But she said her husband, an executive in a private organization, earns only Tk 40,000 per month and there was no salary increment in the last two years.

“But my monthly grocery costs have gone up by around Tk 5,000 a month. There are house rent and education costs for my only kid,” she said.

Why the price has increased exorbitantly:

It is because of rising international market prices, said wheat importers and flour makers.

Bangladesh is heavily dependent on imports to meet its annual demand for wheat of over 70 lakh tonnes. Market players said the demand for wheat flour has been rising at double digit because more and more urban consumers are preferring flour over rice.

Wheat price has climbed to $8.17 a bushel, highest in nearly 9 years, with demand for the staple food commodity rising amid supply crunch. It means per tonne wheat costs $300 (36.744 bushel= 1 tonne). Chicago wheat futures increased to $8.2 a bushel in mid-November, the highest since December of 2012.

The Economic Research Service of the USDA forecast an 11%-14% increase in wholesale wheat flour prices by December this year, meaning that its price may further shoot up in the local market.

In addition to international market factors, diesel price hike in the local market has contributed to the price hike of wheat flour, according to Biswajit Saha, a director of City Group that markets ‘Teer’ brand in the Bangladesh market.

Major wheat producing countries:

China, India, Russia, USA and Canada are the top 5 wheat producing countries in the world. Of which, China and India are the top two wheat consumers in the world and the remaining three along with Australia are major exporters. But natural calamities and lower crops have caused a lower production this year.

Wheat production in America was estimated at 4.425 billion bushels, lower than both analysts’ expectations and the USDA’s forecasts. Russia’s wheat exports dropped by 32 percent since the start of marketing season because of lower crop and the state export tax. Canada’s wheat output this year is expected to lower 38 percent from last year as the country experienced the hottest and driest summers on record.

Spillover impact of wheat price:

Wheat price hike will not be limited within flour only as it is an essential commodity that is used in many other food items.

Prices of bread, biscuits, bakery products and fast food items will go up as flour is a must to make those products.

Chicken, pork and beef prices may also soar as well, because wheat is a major component of animal feed.