Food inflation in Pakistan has witnessed a record rise, triggering prices of essential daily food items including rice, sugar, cooking oil, milk, pulse masoor, poultry, meat, tea and wheat to high levels. Following withdrawal of subsidies and a continued record surge in the prices of petrol, diesel, gas and electricity, food inflation has touched its highest ever mark in Pakistan, taking a giant leap from 30 per cent last year to above the 45 per cent in the current year. According to figures released by the State Bank of Pakistan, food inflation was registered at 28.5 per cent in 2008-2009, but after gradual withdrawal of subsidies and other post-budget initiatives of the government, which resulted in an unprecedented rise in gas and petroleum prices, experts believe that it has gone up to 45 per cent; the highest ever.
Inflation beyond explanation
Though food inflation in Pakistan is being attributed to a global impact, the government’s latest measures have added fuel to the fire, economic analysts believe. Similarly, overall inflation, which in May 2008 was 19.3 per cent, is also now touching its highest figure in country’s history of above 21 per cent, food inflation contributing to 45 per cent of it. This turns out to be a shocking piece of information for the general public as it aggravates their miseries. Under such circumstances, prices will further shoot up. The global impact and lack of good governance might be major reasons behind staggering levels of inflation but the government’s appalling indifference to economic realities is a more convincing reason for uncontrollable hyper inflation devouring the poor. Currently, there is no sign for the situation getting any better, with announcements for price hikes in gas, electricity, petrol, diesel and food items during the last fiscal year. Both food and non-food groups of CPI contributed to this increase.
Making ends meet
As the holy month of Ramadan approaches, every housewife is worried about how to maintain the last year’s menu for Sehri and Iftar this year around, amid the flooding price hikes. Ayesha, a housewife, is concerned about cooking traditional food during Ramadan due to the shrinking value of money. This Ramadan, there will be no flurry of activity at her house in Faisalabad. “This is a part of the year when the women of the house are usually preparing a big spread”, she said. “How can there be any excitement when I cannot treat my family to traditional favourites like pakoras (gram flour dumplings) and samosas, fruits or even sharbat (an aromatic syrup diluted with water and served with ice)?” said Ayesha. “I used to serve them a dessert made of custard and fruits every day for Iftar,” said the 42-year-old mother of five. “But now we can’t afford these things as everything has become expensive”, she said.
Global efforts;
local impact
The UN World Food Programme (WFP) estimates that the number of food-insecure people has increased from 60 million in 2007 to more than 90 million in 2010. Pakistan is one of 16 countries that will benefit from WPF project launched for food-insecure people in response to rising food and fuel prices. Last year’s flash flooding and a decade long war on terror has witnessed a sharp surge in terrorist activities that has compounded food problems to disproportional intensity. One result of these recurrent natural and man-made crises has been a sharp decline in food security across the country, despite sufficient national food production to meet the needs of Pakistan’s population. By 2009, almost 50 per cent of the population, or 83 million people, faced food insecurity, up from 38 per cent in 2003. In the aftermath of the floods, it is believed that this figure may yet have risen to upwards of 90 million. Disparities in socio-economic indicators between rural and urban populations have continued to widen, and progress in narrowing the gender gap remains limited. Women face considerable difficulties in finding employment and accessing educational opportunities, particularly in areas where insecurity constrains mobility. Recent assessments show no improvement in Pakistan’s 57 per cent literacy rate or worryingly poor nutritional indicators recorded in 2001; including 13 per cent wasting among children aged 6-59 months, with levels of stunting and underweight children at 37 and 38 per cent respectively. A third of all child deaths are associated with malnutrition, and micronutrient deficiencies, which are widespread. An estimated 45 per cent of women and 67 per cent of children under five are anemic.
Immediate action to
a critical issue
The gravity of the problem dictates that the Government of Pakistan must take some immediate steps to arrest growing food inflation. First of all, it has to reduce its luxury expenses both on federal and provincial levels. Secondly, we need to revisit our tax system and revamp the existing mechanism of direct and indirect taxes. A Capital Gain Tax must be imposed on wealthy families and individuals who have a long history of tax evasion. Many reasons are contributing to rising food inflation and every factor deserves immediate attention. Take for instance the depth of the energy crisis, which has overshadowed all other problems. If we are able to address the energy crisis, new opportunities in the industrial sector will offer jobs to millions in the unemployed work force. Similarly, we have to increase food production by strengthening our agriculture sector that has an untapped potential to feed the whole nation. Moreover, the Monopoly Control System should work accurately to discourage cartels made by the sugar, cement, fertilisers, LPG, poultry and many others. According to surveys, 70 per cent price hikes are the result of the government’s poor price control system. Government bodies have failed to disband the notorious elements behind hoarding and profiteering of basic commodities. The Competition Commission of Pakistan (CCP) was established in 2009 to provide a legal framework for creating a business environment based on healthy competition for improving economic efficiency, developing competitiveness and protecting consumers from anti-competition practices. But ground realities suggest that culprits are away from the loop of the law. Lastly, State Bank of Pakistan (SBP) should take major steps to in the country.However, SBP’s policy of printing money time and again is the root cause of inflation. It is high time that the SBP resorts to other alternatives instead of printing paper money.
