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Inflation is upsurged by 4.71 per cent during July-August

Oct 02 - 08, 2000

Upsurge Consumer Price Index (CPI) shatters the hope for better life standard and facilities as shrinking purchasing power is creating uncertainties among commons. The long list begins with consumer items which peaks petroleum and power. Not a single commodity remained untouched as subject to this phenomena. A country where a big proportion of the population is deprived of essentialities and comes under the calorie based poverty, price hike means snatching the right from them even to afford necessities.

Monthly review of price indices issued by the Federal Bureau of Statistics shows that inflation is upsurged by 4.71 per cent during July-August as compared to corresponding period of previous year. Previous year it was rose up to 3.28 per cent, but no progress seems in the standard of living due to the poor economic condition of the country. Consumer price index is experiencing a persistent upward trend due to the instability of the currency.

Due to the mounting inflation the prices of all major items have been inflated drastically. The foremost impact of price inflation would blow the lower income class of the country. Although some groups have been showing not very much increase but no group has been left with this effect. The prices of major items are increasing day by day.

Sensitive Price Index (SPI) also registered an increase of 3.90 per cent in July-August which was at 3.5 per cent in the corresponding period of last year. The Wholesale Price Index (WSP) specially shows a considerable movement according to FBS review. An increase of 3.55 per cent was registered in WPI during July-August as compared to 2.87 per cent in the corresponding period of the year 1999. In the month of August WPI shows an increase of 3.85 per cent over August 99 and 0.75 over July 2000.

Group analyses registered a highest increase in the fuel and lighting group (electricity/ hydrocarbon fuel) with 16.26 per cent in August as compared to the previous year. Likewise other groups like transport and communication is showing a surge of 11.97 per cent which is likely to increase further due to the persistent increase in the prices of petroleum products. Recently an increase of 10.4 per cent has been announced by the government in POL prices would further increase the CPI in this regard. Another important group of pharmaceutical and medicines is under a very sensitive relating in this regard as this group has became dearer by 8.09 per cent over last year.

But it is surprising to note that food and beverages shows a lowest increase in the prices, similarly households items like furniture and equipment and laundry and cleaning registered a lowest increase in the prices. Although slight decrease was also experienced in the prices of food and beverages group but that was of seasonal reasons.

Although prices of some items of daily use showed a slight decrease but increasing inflation has negated that decrease. On the other hand this is also an existing fact that even a slight increase in the price of commodities of daily use put enormous burden on people as purchasing power is also shrinking due to the increasing inflation.

Flour prices

Nevertheless CE General Pervez Musharraf said that the prices of all commodities except sugar are stable, increase in flour prices was due to the increased support price of wheat. Petroleum prices have been increased due to the price hike in international market, he added. But is there any answer for the increase in the POL prices which will affect the whole price structure of the country. Daily budgets goes up due to the increase in petroleum products prices. Increase in petroleum means increase in transport fare which ultimately affect all commodities.

This is not the case of electricity or petroleum only other commodities like vegetables, fruits, tea, local telephone charges, grain, pulses etc all are subject of persistent price hike. Recently Pakistan Post Office has proposed an 100 per cent increase in postal and cargo services charges. Pharma prices have also increased with which even life saving drugs are becoming out of the reach. These are few examples, besides there is a long list of commodities in which increase has been made during last few months.

With the reduction in the prices of furnace oil, hopes raised among the people to get their electric bill reduced. But soon it was eclipsed by the even more increased by different oil companies. Electricity charges are also likely to rise in a couple of months or days. Prevailing scenario shows that we have only one solution that is increase in the prices without considering the other grounds. So far benefits of deregulation does not seem to be benefited the society.

In order to rationalize the price structure government must take long term measures. Commodities like petroleum although the biggest source of revenue for the government but it also must keep in mind that increase in the prices has spiral effect which causes price hike of all commodities. Taxes must be cut down on POL products which will help to decrease the prices of the commodities of daily use. Government should take immediate measures against rising inflation and to stabilize the rupee against the dollar. Proper vigilance must be on the prices of the commodity of daily use.