KARACHI, Oct 17: Rampant price escalation placed the food inflation at seven-year high in September 2007.
The unchecked food price escalation which is mostly an outcome of hoarding and black-marketing, increased prices of almost all essential goods needed by a common person.
The latest report of price trend shows that in September 2007, the food inflation reached 13 per cent on year-on-year basis which is the highest figure since 2001.
It has been argued by the government that one of the major reasons for food inflation was distribution problem which creates supply and demand gap, resulting in a price-hike.
However, no action has been taken against the organised wheat price hike, 100 per cent increase in rice prices and sugar hoarding. These are the essential items used on a daily basis.
Earlier, the food inflation reached second high as 12.7 per cent in December 2006 and this was the highest in last 12 months.
At the same time, the CPI of annual average showed that the food inflation never reached 13 per cent since 2001. Food inflation was 12.5 per cent in 2005.
The 13 per cent inflation in September 2007 carried the Ramazan factor which is usually known for sudden price jump. However, the wheat factor with its massive weight in the price index had started much earlier to influence the market and food inflation.
Analysts identified three reasons for the recent food price hike; the international food price increase, high oil prices and low production of food items in the country.
“The wheat prices have come down for last couple of weeks and this will impact the food inflation in the October,” said an analyst, adding that the October food inflation could be around 12 per cent.
However, he feared that the food inflation could jump again if the government passes on the oil price impact to the local market. The oil prices have gone up to $88 per barrel on Monday and the oil experts have been predicting for further increase as the winter season is approaching closer to Europe and America.
The food inflation which reached seven year high in September, was untouched by the oil price hike as the government has kept the oil prices frozen for at least one year. The real impact of recent oil prices would come in next three months. Analysts believe if the oil prices are increased, the food inflation could hit all time high.
“In the name of free market economy the government has allowed black-marketing, hoarding and forced price increase by eliminating the public factor from this entire price affair,” said Ehtesham Arif, a retired bureaucrat.
He said the government did not have any policy to stop these forces behaving against the market practices making the life more painful for a common person.
The recent wave of price increase touched a wide range of food items, ranging from essential items like wheat, sugar, rice to vegetables, meat, edible oil, etc.
