It has been almost four years in a row that Pakistanis have been exposed to a consistent escalation in prices of every conceivable consumable required in life. This incessant inflation in Pakistan has made life miserable for the lower classes, has broken the back of the middle, and has now started to unnerve even the well-off. It has certainly not come as a sop for the Pakistanis that the surge in food prices is a global phenomenon that has put the staple food almost out of the reach of many people. The year of the coronavirus pandemic saw the almost unstoppable rise in food prices that has been experienced by almost all countries of the globe that period is now over since long but the prices have not come down.
The incumbent dispensation has unconsciously abetted the inflation in Pakistan genie that was unleashed by the previous regime whether consciously or unconsciously that shows no signs of abating. The major drivers of rising inflation are attributed to food, energy prices, and transport fares. It is observed that the mismanagement and lack of effective governance played havoc as it pushed up inflationary pressures.
The gas and electricity prices soared to the highest possible levels creating tremendous hazards for the people. To top it all the depreciation of the exchange rate has also hiked inflationary pressures and made them unbearable. The current figures show that overall inflation in Pakistan increased by 32 percent on a year-on-year basis which is simply unbearable. It is now reported that in the last three years the percentage of price increases has gone up to 133 percent and this is the highest such increase recorded in Pakistan’s history.
Pakistanis are greatly perturbed by the incessant increase in prices in almost everything in the country. The people are highly disturbed about the state of affairs and frequently ask questions that for how long they will suffer food price inflation and how much the prices will increase. It must be appreciated that the anxiety is well placed particularly when it is based on the data signifying the linear upward movement in prices, especially of food and energy, particularly after the PTI government took charge.
The most worrying aspect is that the government seems quite oblivious to the extreme difficulty the vast majority of people face in making ends meet. It is quite apparent that the purchasing power of most households continues to erode because of the sustained and steep increase in prices vividly describes the economic discomfiture of the country.
It is for all to see that the prices of various food staples have spiked under the present government. The prices of such items of daily use as vegetable ghee, cooking oil, sugar, and chicken have become considerably more expensive than they were four years ago. Likewise, the cost of beef, eggs, milk, and rice has also rocketed up. Though the increases are reported in cold print they simply do not reflect the true impact of inflation on ordinary people as the price spiral has made life literally unbearable.
There is little doubt that the post-Covid-19 global recovery has sent international commodity markets spiraling across continents on demand-supply imbalance but double-digit food price inflation in Pakistan remains much higher than experienced in other regional countries like India and Bangladesh, even though both are net importers of basic food items — and energy — like Pakistan.
Inflation in Pakistan now has become an endemic issue and the government cannot absolve itself of responsibility by dismissing the hike in domestic prices as a phenomenon of the international commodity cycle. The massive devaluation of the rupee on the pretext of expanding deficits on the current and trade accounts is not helping the country.
More worrying are the estimates proffered by governmental agencies mandated to assess the trends of the prices that predict further escalation of the price structure throughout the country. The State Bank of Pakistan has also substantiated this prediction and has accordingly revised upwards its inflation forecast for the year. If anything, all indicators point towards more troubles for low-middle-income families already struggling to cope with erosion in the currency’s value, pay cuts, and job losses.
Keeping in view the enervating cost of living it becomes imperative to profoundly investigate and rationally reappraise the price mechanism in Pakistan with a view to ascertain any leverage government agencies possess in decisively influencing pricing policy. It is equally important to ascertain the corresponding factors such as the cost of inputs resulting in price increases.
The time frame of increasing prices may also be realistically determined. The regulatory procedures for allowing increases in prices may be thoroughly checked. It is equally necessary to explore if forces governing market mechanisms are appropriately cognizant of the monetary and social costs of price hikes. Moreover, the possibility of freezing price levels for a reasonable period of time may be worked out. Finally, the factors responsible for the lack of decrease in prices after the reduction in fuel prices that ideally should have a cyclical effect may also be investigated. The Weekender