INFLATION: THE 'OSTRICH' FACTOR

Official statistics add insult to injury

From SHAMIM A. RIZVI, Islamabad
Feb 10 - 16, 1996

The Pakistani masses have suffered from continued inflation for almost a decade without a proportionate rise in income, but the situation has become particularly alarming during the last 3 years. There has been almost 150 per cent increase in the cost of living since 1985-86 but out of this over 100 per cent is attributed to the last 5 years and over 70 per cent during the last 3 years.

As against this, there has been a increase of about 30 per cent in the emoluments of salaried class during the last 5 years. The Pay Commission set up by Nawaz Sharif government, gave its award in 1993 allowing a 35 per cent raise in salaries. The government gave this 35% raise only on basic salaries in 2 instalments but froze the house rent allowance at the previous level. The net increase therefore, came to less than 30 per cent.

According to the report of the Federal Bureau of Statistics, the prices of essential commodities of daily use have gone up, on an average by almost 50 per cent during the last 2 years. The government agencies' figures, though, are always believed to be on the lower side. The report which has been submitted to the government confirms the modest estimates, by independent economists, of the annual rate of inflation at 25 per cent. What is more alarming is the fact that the rising trend is still continuing.

Not all Pakistanis are equally affected by the monsters of price hike and inflation, but the majority is certainly hard hit by this phenomenon. Fixed income groups suffer most due to the surge in prices of essential commodities, as do those whose income does not increase in proportion to the rise in prices, and who cannot pass on the burden to others. Also greatly affected by the price hike are retired people whose salaries or wages were earned in less inflationary times." The standard of living of these groups plummets with inflation and the price hike, sometimes even forcing them to sell their homes or take other drastic measures, says an Islamabad-based economist.

A newly married young Grade 17 officer working in the Ministry of Education (where chances of 'other income' are remote) explained that he could only afford to buy meat once a week. He said "my only source of income is my job and my total take home salary is Rs. 5000 per month. As I cannot afford to pay the high rents prevailing in Islamabad, I live in Rawalpindi — about 15 km away from my workplace — where I am paying Rs. 1800 per month for a 2-room residence, with one bath. I have to spend about Rs. 400 on buses and wagons to reach my office. About Rs. 800 goes toward payment of electricity, gas and water charges. I am left with only Rs. 2000 on second of every month which is hardly enough to meet our kitchen expense for the whole month. That is about all I can manage in my salary. "We cannot think of dining out or going even to a movie." The couple, recently married, expect a tough time when they have a child.

While the common man finds himself helpless when further burdened with heavy prices, a Lahore lawyer has taken his case to the court. The Lahore High Court has already called for a report from the concerned authorities as to what measures have they taken to control the prices. The step came after a local lawyer, M.D. Tahir sought the court's direction to the government to control/check and stabilise the prices of daily-use commodities at the 1993 level.

The petition says the government has miserably failed in performing its mandatory duty to control prices and also to provide basic facilities such as electricity, gas, telephone and water on subsidized tariffs. It adds that the skyrocketing prices have made the life of the common man difficult. Mr. Tahir has drawn the court's attention towards the fact that while the government has cut down sales duty on about 33 items, their prices have not been reduced. The petition is still pending before Justice Ch. Khurshid Ahmad.

As against this, the Economic Coordination Committee of the Cabinet, which met in Islamabad about 2 weeks back to review the general economic situation, noted with satisfaction that the Sensitive Price Index has declined for six consecutive week. It is because of such stark distortions of the facts that the present government has lost its credibility. The Federal Bureau of Statistics has exposed the government's failure in containing inflation. A comparative statement of prices of some essential items of daily use between 3rd week of October 1995 and corresponding period of 1993, as per reports of Federal Bureau of Statistics and from market is given in the table.

Average prices are the prices worked out on the basis of average for the entire country. In big cities, like Islamabad, Lahore and Karachi, the prevailing prices are much higher than those shown in the chart. For instance, mutton is nowhere less than Rs. 100/= per kg. The increase in prices of utilities, like gas and electricity, and consumer items other than food, have also increased by 60 to 70 per cent during this period. Increase in prices of medicines is over hundred per cent.

The satisfaction expressed by the Economic Coordination Committee over "declining prices" is, however, a cruel joke on the suffering millions of Pakistanis and amounts to rubbing salt into their wounds. It would be hard to find a worse example of bureaucratic deception elsewhere in the world. First of all, looking at the overall economic situation in the country, an unbiased expert would confirm — what the consumer already knows — that inflationary trends are assuming alarming proportions. In this context, the facts and figures given by the government are questioned not only by independent economists within the country but also by creditable financial establishments including IMF experts who are openly skeptical about them. Government agencies tell the public that annual rate of inflation is only 13 per cent but the real rate of annual price increase is not less than 25 per cent and going up all the time, the way our official experts prepare the list of sensitive items and compute the rate of inflation on that basis defies both logic and day-to-day experience of millions of housewives from the poor classes constituting the bulk of consumers.

			Dec. 1993	Dec. 1995	Rise %
Curd per kilo		13.57		17.98		35%
Red chilli per kilo	35.65		68.50		92%
Dal (Millet) Mash kilo	14.77		32.47		120%
Open ghee kilo		27.49		39.88		45%
Tin Banaspati ghee	76.85		110.06		44%
Mustard oil kilo	31.95		46.69		46%
Onion per kilo		7.23		10.37		43%
Ata (flour) kilo	4.64		6.81		35%
Eggs per dozen		18.05		22.00		20%
Mutton			66.90		88.69		40%
Gur			10.90		15.28		40%
Rice basmati		8.74		12.24		39%
Irri rice		6.63		8.98		35%
Dal masur		20.12		25.91		34%
Cloth washing soap	3.50		4.88		39%
Sugar			12.92		16.45		25%
Fresh Milk		10.86		13.88		32%
Dried Milk		342.20		430.58		24%
Bread 			6.52		8.01		25%
Dal chana		16.25		23.54		45%
Dal mong		17.12		24.27		39%
Beef (without bones)	40.00		60.00		50%
Chicken			50.00		80.00		60%
Toilet soap		6		10		80%
Fish per kg		30.00		45.00		50%
Firewood per kg		30.00		45.00		50%
Match box		1.00		2.00		100%
Tooth brush ordinary	6		10		80%
Course cloth koralatta
per yd 			5.00		8.00		60%
Biscuits popular
range per packet	9.00		18.00		100%
Electrical bulb		8.00		13.00		60%
Shoe polish		4.00		7.00		85%
Detol medium size	9.00		18.00		100%

The prices of drugs and medicines have almost doubled during the last 3 years.