Food inflation in Pakistan has been constantly rising as part of the general inflationary spiral. Last week, the Pakistan Bureau of Statistics reported inflation as measured through the Sensitive Price Index (SPI) — or price changes in 51 essential items. It also provided inflation figures for five expenditure groups – ranging from people who spend from Rs17,732 to Rs44,175 per month.
The latest PBS figures show that during the first week of July, yearly SPI inflation or the spike in prices of essential items for various groups ranged between 27.3pc and 32.2pc. Inflation rate in Pakistan spiked to 21.3% in June – the highest pace since 2008 – because of exponential growth in the prices of petroleum products. On a month-on-month basis, inflation soared to a 30-year high as it clocked in at 6.3pc in the last month of the fiscal year 2021-22, compared to an increase of 0.4pc in the previous month and a decrease of 0.3pc in May 2021. The CPI-based inflation rate jumped 19.8pc in urban areas and 23.6pc in villages and towns. The prices of both non-perishable and perishable food products increased significantly last month. The food group saw over a 24pc hike in prices in June compared to the same month a year ago. Prices of perishable food items increased by 36.34pc. Non-food inflation increased by 17.3pc in urban areas and 20.4pc in rural areas, according to the national data collecting agency.
Core inflation – calculated after excluding food and energy goods – jumped by 11.5pc in urban areas and 13.6pc in rural areas. Weekly inflation – based on the sensitive price index (SPI), spiked to a decade high of 32.01pc on a year-on-year basis during the week that ended on June 30. On a month-on-month basis, it increased by 3.63pc during the last week of the fiscal year 2021-22.
To put it simply, an average household in recent weeks has seen a dip in its income by around 30 percent. This is not mere statistics. It tells the story of extreme human misery all across the board.
Reports from all sources confirm that food inflation in Pakistan remains much higher than in other Asian countries which also face the challenge of rising international fuel and food commodity prices. In this connection it is notable that in June average food inflation in China, India and Bangladesh stood at 2.9pc, 7.75pc and 8.3pc respectively.
It is relevant to note here that the list of 51 essential items includes only those items that are daily staples such as petrol and CNG, wheat flour, rice, cooking oil, pulses and potatoes. The SPI inflation is very high as a result of which most poor people are struggling for survival.
According to PBS figures, in June the yearly food inflation stood at 24pc in urban areas and 27pc in rural areas. In other words, people have to purchase food items at prices 24pc higher in urban areas and 27pc higher in rural hinterland.
To ameliorate the situation, the federal government announced in June a monthly subsidy of Rs2,000 for all those who earn less than Rs40,000 per month to help them absorb inflationary pressures that erupted after a sharp rise in domestic fuel oil prices. But this amount is too meagre to act as a cushion for people living on the fringes of poverty. Also, it is doubtful whether the announced handout would reach the deserving families.
As pointed out by some economic analysts, those with a monthly income of Rs40,000 would now have Rs42,000 to spend. But this Rs42,000 would have the purchasing power of Rs31,900 in urban Pakistan in terms of the real value of the money a year ago. In the rural areas, it would have an even lower value — Rs30,660.
In the midst of ongoing political instability, no steps are being taken to tackle the root causes of price inflation. These include structural deficiencies in our agriculture sector, lack of effective coordination between federal and provincial governments, absence of effective district governments, half-hearted implementation of the laws against unfair market practices like smuggling, cartel making, hoarding and overcharging, price inelasticity of most essential food items, broken supply chains and the existence of a large grey economy. As long as these problems are not solved, inflation will continue to rise and the subsidies announced will not make any difference to the situation.
No doubt, rising international fuel and food commodity prices are a major cause of rising food inflation. But equally to blame is the lack of planning by our own government and absence of remedial measures to soften the impact of imported inflation.
Unchecked wheat flour and sugar crises, hoarding and black marketing and price gouging are to blame for rising retail prices. For this situation all governments, past and present, are responsible. It is reported that during Eidul Azha, most retailers in Lahore and Karachi charged Rs100 per litre over and above the printed prices of edible oil and ghee.
It is not yet too late to take pre-emptive action to stabilize the situation. The first step towards this would be to drastically cut administrative expenditures and eliminate waste at all levels of the government. Austerity should be the name of the game now if inflation is to be controlled.