MINISTER for Information and Broadcasting Marriyum Aurangzeb, who is chief spokesperson of the Government, has taken pride and satisfaction over, what she sees, significant reduction in the prices of essential commodities due to prudent policies of the coalition government but official data of May inflation released by Pakistan Bureau of Statistics (PBS) presents a dismal picture of the overall pricing situation. The figures revealed that the country’s inflation rate soared to a new all-time high of 38 percent in May 2023, making it the highest in the region. This remarkable level has not been witnessed in the nation since the commencement of comparable records in 1957.
The Minister surly based her claims in reduction of prices of wheat flour, ghee/cooking oil and LPG but here again the price reduction in the open market is not comparable with the figures cited by the spokesperson. According to her, the price of flour has decreased by 35-40 rupees per kg and cooking oil by 60-70 rupees. LPG cylinder prices for domestic consumers have been reduced by 438 rupees from 2,759 to 2,321 rupees, while commercial LPG cylinder prices have been slashed by 1,686 rupees, from 10,619 to 8,933 rupees. This much reduction is nowhere to be seen, otherwise the overall impact on the inflationary figures would have been quite significant. The Minister must have reasons to attribute the reduction to prudent policies and punitive action against hoarders and smugglers. However, market watchers claim the prices of wheat/wheat flour were artificially raised to all time high by boarders and smugglers and the situation eased only when the Taliban Government in Afghanistan decided to import cheaper wheat from Russia and Ukraine. Similarly, the prices of edible oil in the international market have come down by $200 to 250 per ton in recent months but the local industry is not willing to pass on the due relief to consumers and they also pocketed all the margins in the past as well. No doubt, the hands of the government were tied due to a number of factors including political uncertainty during the last one year, consistent attempts made to impede its performance by way of violent protests, presence of hostile provincial governments in Punjab and KP, weaker control over administration and unusual delay in the finalization of the deal with the International Monetary Fund (IMF) with attending consequences for the volatile exchange rate and prices of POL products. And it is because of all this that Pakistan now holds the unfortunate distinction of having the highest inflationary pressure in Asia which previously belonged to Sri Lanka. There are reasons to believe that the rising inflation has much to do with the internal factors as against the claims repeatedly made by different spokespersons of the government that it was imported inflation. This is borne out by the fact that inflation is on the decline in all other regional countries – Sri Lanka witnessed consistent decline in inflation over the last eight months, India’s inflation rate slowed significantly to 4.7 percent in April and China and Afghanistan also saw a decline in inflation. It is also a matter of concern that the inflation bulletin released by the PBS shows inflation was considerably higher in rural Pakistan than in urban centres. Urban inflation increased by 35.1 percent yearly in May 2023 as compared to 33.5 percent in April 2023 and 12.36 percent in May 2022. Rural CPI increased 42.2 percent on a year-on-year basis in May 2023 as compared to an increase of 40.7 percent in the previous month and 15.88 percent in May 2022. The situation is alarming as the incidence of poverty was much higher in rural than urban areas. Unfortunately, there is no expectation that the situation would improve in the near future and instead it is apprehended that inflation would rise further if the Government based its budgetary proposals as per guidelines of the IMF. The rupee continues to shed its value and as a result consumers are not getting due relief whenever prices of oil decline in the international market as the difference is adjusted against the exchange rate. There is also no end to the upward revision of electricity and gas tariff and it is understood that each and every increase is reflected in the prices of products, goods and services. We have also been emphasizing in these columns that the government can check artificial price-hike through administrative measures but so far it has not demonstrated its ability to do so. Like huge reduction in the prices of edible oil, which has not been fully passed on to the consumers, the transport sector is also unwilling to reduce fares and transportation charges despite declining prices of the POL products. The prices of petrol have been brought down by Rs. 20 per litre and that of high speed diesel by Rs. 35 a litre as a result of two consecutive revisions during the last one month but this significant reduction is not reflected in fares. The price situation is quite grim but future indications are not very much encouraging, especially if seen in the backdrop of a statement by Minister of State for Finance Dr Aisha Ghaus Pasha, who told participants of a conference that there were no other options or Plan B in case the IMF programme is not revived as the government was committed to restoring the programme by completing the pending 9th review. This effectively meant that with or without the IMF programme, the situation for under duress consumers would remain unchanged – there would be further inflation if IMF is satisfied through fulfilment of all the conditions and more inflation if there is no revival of the programme as is the case now. The repeated assurances of Pakistan Forex Association to meet all dollar requirements of the government show avenues are available to meet foreign exchange requirements and the authorities concerned should mull over all these options to stabilize the situation. At the same time, people are expecting significant relief in the forthcoming budget and it is hoped the government would not disappoint them. The political situation can also improve a lot if preference is shown for the dialogue process to sort out differences, which are surely bridgeable and this will have a salutary impact on the overall economic situation.
