PRICE REVIEW: INFLATION TURNS TO DOUBLE DIGIT

The government's failure to check and control prices in the absence of a consumer rights law has left the consumers at the mercy of exploitative forces shopkeepers, transporters and industrialists.

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Dec 04 - Dec 10, 2006

Inflation, in terms of Sensitive Price Indicator (SPI), turned into double-digit of 10.37 percent during the week ending November 16, 2006. According to weekly price review released by Federal Bureau of Statistics (FBS), the SPI of 53 items of daily use, with the benchmark of 2000-01, reached the level of 150.05 during the period under review.

The hardest hit, again, were the households with incomes up to Rs.3000 per month with the increase in SPI of .053 percent over the previous week. It rose by 0.46 percent for households with the income bracket of Rs. 3001-5000; by 0.36 percent for those with incomes between Rs.5001 and Rs.12000; and by 0.14 percent for those with incomes above Rs 12000.

Compared to the corresponding period of last year, the SPI shows an increase of 13.07 percent for the lowest income group; of 12.41 percent for those with income group of Rs.3001-5000; of 11.84 percent for those with income of Rs.5001-12000; and of 9.74 percent for the highest income group. The significant feature of the weekly bulletin was the year-on-year rise in the prices of some necessities and for kitchen items it was exorbitant. These items were sugar, potatoes, firewood, gur, LPG, and all kinds of pulses as well as higher gas charges, which hit the low-income group.

The bulletin on SPI, based on data collected for about 53 items from 17 centers, showed that 22 items registered increase, seven items showed decline, while prices of 24 items remained unchanged. Noteworthy was the behaviour of the price of onion. Its average price showed an increase of 11.53 percent over the previous week. Potato prices moved up to Rs.27.20 per kg from Rs.25.91 per kg in previous week. As compared to corresponding period, this meant an increase of 38.35 percent.

However, further analysis of the data showed that out of 22 items year-on-year basis, 11 items were dearer by double digit. These include: onions by 161 percent, potatoes 38 percent, red chilies 28 percent, tomatoes 27 percent, gur 22 percent, cooked beef 17 percent, garlic 15 percent, beef 13 percent, mutton 13 percent, fresh milk 12 percent, and curd price increased by 11 percent over the corresponding week of last fiscal year. Among these items, in a short span of one week, the prices of onion increased by 11.53 percent, potatoes 4.98 percent, farm egg 3.79 percent, garlic 2.12 percent, red chilies 1.55 percent and cooked beef prices increased by 1.04 percent over the previous week. The FBS figures further showed that though prices of 24 items posted no change during the week, compared to the corresponding week of last year, several items are now costlier. For example, gas charges increased by 20 percent, firewood by 18 percent, cooked Dal 16 percent, tea (packed) 12 percent and tea (prepared) by 11 percent. The bulletin further indicates that though the prices of seven items decreased as compared to the prices of corresponding week of last year, items, which showed increase in their prices, were gram pulse, which is dearer by 49 percent, mash pulse 48 percent, moong pulse 28 percent, while sugar price increased by 22 percent.

This situation was more serious in the federal capital, Islamabad. The backbreaking increase in prices of kitchen items has not only disturbed the budget of lower middle class but also restricted their access to basic necessities of life. The statistics showed that prices of more than 31 daily kitchen items in the federal capital have recorded massive increase during the last one month. According to a survey, most of the people from the low-income group criticized the government for its failure in containing the prices. They said that the government was bragging about macroeconomic growth, amassed foreign exchange reserves but was indifferent towards the plight of the poverty stricken population.

During the last one month several daily use items registered phenomenal increase and among them onion tops the list being sold at Rs.60 per kg, tomato Rs.30 per kg and potato Rs.40 per kg. A housewife said: "My children are malnourished as I am unable to provide them enough meal for two times". She said she was working in six houses but her income was not enough to feed her three children properly. She was among the scores of people who are forced to cut their weekly purchases of fruits, meat, etc, due to high prices particularly the rising utility bills, and they have curtailed the purchasing of even essential items. Even in the first seven days of a month, they could hardly be seen in the market. The price-hike has also discouraged savings and investment, thus accentuating poverty.

Economists believe that when inflation, under normal circumstances, rises, unemployment rate decreases and with it there is an increase in wages. But Pakistan is exception in this regard. A government employee said the government was pricing itself on over $ 12 billion forex reserves but despite that there was no trickle down effect. He said prices were going high the roof, unemployment is steadily rising and poverty is registering new highs. "Our President and Prime Minister are claiming at every forum that our economy has improved. They really need to explain what they mean by improvement," he said.

The job situation has only worsened with the middle and lower middle classes standing at the very place they had been seven years back. Even in India, unemployment rate and wages have gone up with the economic growth, which helped the country control inflation.

The government's failure to check and control prices in the absence of a consumer rights law has left the consumers at the mercy of exploitative forces shopkeepers, transporters and industrialists.

The chart shows an average increase in prices of 31 items in the federal capital during the last one-month.

S.NO.

COMMODITY

UNIT

NOVEMBER

OCTOBER

INCREASE IN RUPEES

1

Wheat

Kg

11.83

11.40

0.43

2

Wheat flour Av.Qlt

Kg

15

13.12

1.88

3

Rice Basmati Broken

Kg

26

20.43

5.57

4

Rice IRRI-6

Kg

20

16.11

3.89

5

Masoor Pulse Washed

Kg

50

41.85

8.15

6

Mong Pulse washed

Kg

64

55.90

8.1

7

Mash Pulse washed

Kg

85

68.60

16.4

8

Gram Pulse Washed

Kg

48

42.70

5.3

9

Beef

Kg

150

120

30

10

Mutton

Kg

270

230

40

11

Egg (Farm)

Doz

40

36

04

12

Sugar

Kg

38

34

04

13

Gar

Kg

50

43

07

14

Milk (Fresh)

Ltr

30

26

04

15

Curd

Kg

36

30

04

16

Veg. Ghee (Tin)

2.5kg

214

213

01

17

Veg. Ghee (Loose)

Kg

65

64

01

18

Mustard Oil

Kg

90

70

20

19

Cooking Oil (Tin)

2.5 Ltr

215

213.5

1.5

20

Potatoes

Kg

40

26

14

21

Onion

Kg

60

24

34

22

Tomatoes

Kg

30

20

10

23

Bananas

Doz

70

35

35

24

Salt (Powered)

Kg

6

4.7

1.3

25

Red Chilies Powered

Kg

110

84

26

26

Garlic

Kg

96

61

35

27

Tea (Packed)

25gm

70

68.9

1.1

28

Mach box

Each

0.68

0.50

0.18

29

Firewood

40kg

220

185

35

30

Bread plain mid siz

Each

12

14

02

31

Chicken

Kg

90

85

16