Apr 21 - 27, 2008

The common people are hard-hit by unprecedented rise in the prices of food basket-items in Pakistan. The food inflation has touched new heights during the last one month after general election of February 18. Consumer price index food inflation was recorded at 16 percent in February 2008 after reaching a local peak of 18.2 percent during January 2008, the highest level seen since April 1995. The steady increase in the prices of 24 consumers' items has pushed up the overall inflation to a new historic height.

The high food inflation continues to hurt low-income groups disproportionately in Balochistan, the country's poorest province. The demand-supply gap is widening and the province is facing flour shortages in many districts. The political leaders talk of the conspiracy being hatched to topple newly installed democratic set up in the country. The people, who had attached great expectations from the new political set up, want solution of their key problems including soaring prices of commodities and hours long electricity load shedding in summer.

According to the latest report of State Bank of Pakistan (SBP), the contribution of food group in overall inflation increased from 55.4pc in Feb 2007 to 59.9pc in Feb 2008 due to persistent high food inflation. Consumer price index (CPI) rose to 11.3 percent (YoY) in February 2008, from 7.0 percent in June 2007 because of expansionary fiscal policy and unanticipated strength of international commodity prices. The increase has hit hard the lower and the lower-middle income groups. According to Federal Bureau of Statistics, Sensitive Price Index (SPI) surged by 17.03 percent in week ending March 20, 2008 over the same period of last year. During the week ended on March 14, SPI inflation increased by 15.67 per cent over the corresponding period last year. In the first week of last month, the SPI witnessed an increase of 14.53 per cent, which rose from over 12 per cent in the previous week.

Balochistan is known as fruit basket of Pakistan, as it produces a great variety of fresh fruits in bulk. Ironically, the prices of fruits have been steadily going up in the provincial capital for the last five years. The people belonging to lower and the lower-middle income groups are unable to afford to buy the seasonal fruits at the higher prices. The province contributes 90 percent to national production of grapes. Last year, grapes were being sold Rs. 80-100 per Kg in Quetta. The prices of other locally grown fruits like cherry, apricot, apple, pomegranate etc. have soared beyond the reach of common man. Having fruits has become a luxury for a common man, who already lives hand to mouth.

A wheat flour crisis is also raising head in the province, which already faces the problem of food insecurity. Being a wheat-deficit province, it heavily depends on Sindh and Punjab to meet its wheat requirement. It requires 900,000 metric tons of wheat annually to feed its population of 6.8 million people. The wheat inflation in the province aggravated by the critical situation erupted in the country after Benazir Bhutto's killing on December 27. The local flour traders could not get supplies from Sindh and Punjab during the critical situation and the people faced an acute shortage of wheat in the province. Since then, the price of wheat has skyrocketed in the province.

The smuggling of lucrative Pakistani subsidized wheat to Afghanistan has been a key reason that created shortage of wheat in the province. According to an estimate, about 1.5 million tons of flour crossed over to Afghanistan in the current financial year as against the officially allowed quota of 0.5 million tons a year. The smuggling needs to effectively be checked. Frontier Corps need to take effective measures to foil all bids to smuggle wheat via border town of Chaman to Afghanistan. Balochistan's total storage capacity of 0.223 million tones also needs to be enhanced, as the federal government has already increased the strategic reserve quota of wheat from 0.5 million tonnes to 1 million tonnes annually. The federal government recently informed the provinces that it would not be able to subsidize wheat for them in the years to come, so they have to adopt their own mechanism for maintaining wheat stock and prices.

Today, there are reports of wheat shortages in many parts of the province and the flour crisis will continue to worsen if the effective controlling measures are not taken at the official level. The caretaker Balochistan government recently increased the official price of flour from Rs14 to Rs15.50 per kg after consultations with flour mill owners, fixing the open market price at Rs.305. Currently the price of a 20Kg bag of flour has reached to Rs 550, as against Rs305 price earlier fixed by the government. The people in Quetta, Loralai, Khuzdar and other areas seem standing in long queues for purchasing flour. The sub-standard quality flour is being sold at higher prices.

The caretaker Chief Minister had directed the concerned authorities to take stern action against hoarders of wheat and profiteers immediately after the crisis-like situation recently erupted in the province. The concerned authorities however had failed to do enough for ensuring regular supply of flour to retail outlets and to check the wheat inflation in the province. The people had complained that measures taken by the government to overcome the flour crisis in Balochistan had proved ineffective as consumers were paying a higher price for flour. Today, the same situation is returning to the province even after the new provincial government has taken charge of the provincial affairs. The people are still purchasing flour at higher prices.

The new provincial government has taken oath last week. Controlling the prices is the biggest challenge for the new government. Despite demand and supply problems, the provincial government needs to control profiteering and hoarding of commodities by some unscrupulous traders and sellers in the local market. The price-control committees at district level need to be activated and their performance should be improved. The monitoring functions of these committees need to be improved and enhanced in all the towns of the province. The widening demand and supply gap for essential commodities need to be arrested and steps should be taken to remove snags in supply-chains. The price-hike has hit the general masses, who are presently looking to the new political set up for relief.