Unstoppable Price Increase



October 2, 2022

Unstoppable Price Increase

Unstoppable Price Increase – Pakistan is in the grip of a vicious price spiral for the last few years that have failed to abate fatally damaging the purchasing power of the common man. The price spiral has affected almost all sectors of the economy and the results are devastating as many middle-income families cannot now dream of owning their own house and prices have skyrocketed beyond their means.

It is a singular catastrophe that a middle-level earner cannot now own a house or even a flat and the very impact of the situation is tremendously demoralizing despite futile efforts of the incumbent political dispensation to publicly declare various loan schemes as the amount they offer is way less than the prevailing prices in the open market. This situation is visible in every other aspect of the economic spectrum whereby the price mechanism is controlled by cartels who determine the prices irrespective of the ability of a common Pakistani to afford them.

The economic situation of the country was weakened due to the Coronavirus pandemic as vulnerable households relied heavily on jobs in the services sector and the projected weak services growth is likely to be insufficient to reverse the higher poverty rates precipitated by the pandemic. It is noted by international economic analysts that economic activity contracted and poverty is expected to have risen as monetary and fiscal policy tightening, earlier in the year, was followed by a lockdown.

Unstoppable Price Increase And Pakistan’s Economic

Pakistan’s economic outlook remained fragile for at least two years as the outbreak of the Coronavirus compounded the country’s miseries. The news is not good and the outlook is dire for Pakistan the inflationary spiral reflects that the informal sector is hit more than its proportion. This is something to be worried about but instead of addressing such problems, the country is left at the whims of the cartels that are manipulating the price mechanism.

The prevailing situation strengthens the conventional wisdom in Pakistan that the country has been captured by the elite and that the grip of this segment has never lessened. On the contrary, the grip of such cartels is increasing by the day. It was often mentioned that the most important factors of national existence in Pakistan stood on the foundation of two historical legacies: the concentration of power in an overdeveloped state and its elite, including the dynastic political elite. Although elites balance multiple class interests, they essentially remain responsive to their own interests and the interests of their narrow client base. It was often lamented that in the broader scheme of things the governance order in Pakistan has not been open to the wider citizenry.

The latest developments in the country point out that the narrowness of the interests of the elites are now shared by emerging forces and the most prominent of them is the vendor controlled by the cartels. The rising power of the cartels is duly augmented by the hoarder and the transporter and they jointly support the vendor as their front-man. The cartels look forward to the mishandling of crops at the farm and remain current about the poor storage and transportation facilities and inadequate market infrastructure.

Unstoppable Price Increase And Cartels Hold

They are often aware that which crop will be picked up by transporters on priority and which is going to be hoarded. They are constantly apprised of the profiteering levels of the trading cartels importers/traders/wholesalers and transporters and these components of the market depending upon the cartels to be an effective part of the retail chain and they are encouraged to keep up their activities by providing merchandise on long-term credit basis.

The most problematic aspect of this situation is that such cartels hold the wide discretionary authority to keep fluctuating the prices and also to provide concessions wherever appropriate. The entire sequential process is built around the cartels and they act as the linchpin. The hidden market forces jump up to their assistance whenever public sentiment advocates boycotts of pricey items and portray the cartels as the helpless segment who makes their ends meet by laboring in difficult conditions.

The cartels are the largest segment of retail trade that operates not only out of the regular supply chain and successfully avoiding all supervisory regulations. The only way to tackle the growing power of the cartels is to establish large purchase centers and wholesale markets at the district level, preferably under public-private partnerships. Similarly, efforts should be made for onward supplies to other districts of the same province or of another province that can be cheaply done by establishing a network of licensed transporters so that at the time of supply shocks they cannot overcharge.

The most effective organ for limiting the power of the cartels is the provincial governments that, with the active collaboration of the corporate sector, can also set up large processing units for merchandise under public-private partnerships. At times of peak production of certain merchandise, these units can get supplies at agreed prices so that manufacturers do not have to sell their merchandise for a song. Also, during a lean production period in a certain district or province, merchandise can be supplied to retail markets there. This situation is required to be enhanced so that the wider availability of merchandise may ultimately reduce the prices across the country. The Weekender


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