"I used to go to the market thinking about what to buy. Now I have to think about what to leave out so the month lasts," says Mahim Ahmed, who works for an insurance company. A report by Bangla Tribune's Golam Maula finds that higher prices for essentials and the rise in fuel prices have pushed up the cost of transport, gas, electricity, food, education and medical care, while incomes have not kept pace.
The clearest effect is on the shopping list. Many low-income families now buy less fish, meat, milk, eggs and fruit, and more are switching from fish and meat to eggs, and from eggs to lentils or other cheaper food. Mahim Ahmed's family of five once had fish or meat at least one day a week; now meat is often dropped for fish or eggs, and even eggs are cut when prices seem high. Some have stopped eating out; others walk instead of taking a rickshaw or bus.
To meet large expenses some are turning to bank consumer loans or credit cards. Bangladesh Bank data show consumer loans rose by Tk 5,364 crore from April to June this year, to an outstanding Tk 163,699 crore at the end of June from Tk 158,335 crore at the end of March; over the nine months from last September to this June they grew by Tk 13,358 crore. Consumer lending also includes home, car, education, medical and card loans, so not all of it goes on daily needs.
Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, said the steady rise shows many households relying on bank credit to cope with living costs; without matching income growth, borrowing may help in the short run but raises household debt and financial risk over time.
Meanwhile demand for credit in productive sectors is weak. From March to June industrial lending grew by only Tk 552 crore and outstanding construction loans fell by Tk 3,909 crore. Mohammad Hatem, executive president of BKMEA, said entrepreneurs will not borrow to invest until the gas and electricity crisis is solved, and one bank's managing director said many banks are turning to retail and personal lending as corporate demand falls.
Photo: mohigan / Wikimedia Commons (CC BY-SA 3.0)
Source: Bangla Tribune
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