- More action and less talk required to control rising prices
The world has changed. Nothing is the same as before. But inflation continues to rear its head in Pakistan. It is hardly a new thing for the inflation target set by the federal government to be missed, but despite the rhetoric, it can hardly escape the blame for the inflation rate rising to 8.6 percent in June, up from 8.2 percent in May. This takes the average CPI inflation for FY20 to 10.74 percent against 6.8 percent in FY19. It is counter-intuitive for growth to be so high at a time when the economy is contracting because of the global slowdown caused by the lockdowns to stop the covid-19 pandemic. The contraction in demand should have caused prices to fall. Instead, food inflation leads the way.
This is an area where the government did not intend to contribute, but where ruling party figures have been implicated. Unfortunately for the government, its investigations, which were supposed to fix responsibility, have failed to bring down prices. Official figures show that food inflation was fuelled by a 17.7 percent rise in wheat prices, along with supply problems. The government’s failure to procure wheat was behind this hike. The decision to export sugar also played its role in sending up the price of that commodity. Though public outcry led the government to appoint an enquiry commission, those named in its report have gotten away scot-free. More importantly, artificially jacked up prices have not come down. As if food inflation was not enough, the government pushed through a massive hike in fuel prices. All the fierce talk 0f fixing the ‘fuel mafias’ has now dissolved in an abject surrender to the oil marketing companies though it is no skin off the government’s nose, it will be the beleaguered consumers who will be deprived of any benefit from the collapse of international oil prices.
Instead of trying to blame previous governments, or vague mafias, the government must pay more attention to rising prices. After all, it hurts the very class most which the Prime Ministers showed such touching concern by refusing to impose lockdowns. It is also no help to the government that there should be such a rate of food inflation. All inflation is electorally bad, but food inflation is the worst.