Govt fails to check surging food prices in three years

Published August 19, 2021
Market people say the government has not given paramount importance to soaring food prices. — AFP/file
Market people say the government has not given paramount importance to soaring food prices. — AFP/file

KARACHI: Amid positive economic indicators in the first three years of the PTI-led coalition government, a major concern for consumers has been the galloping rise in prices of food items.

Market people say the government has not given paramount importance to soaring food prices owing to lack of an effective price-checking mechanism which is mostly confined to holding weekly meetings of National Price Monitoring Committee (NPMC) rather than taking any practical steps.

From food sector investors to middle man, retailers, wholesalers and mafias, everybody in their capacity have enjoyed a free hand in pushing up the rates to the maximum limit. The government has failed to enforce its writ even to create fear among stakeholders and market forces for facing any serious repercussions in case of any wrongdoings.

Brokerage house analysts offered a different view in contrast to market people observation over rising kitchen item prices.

Tahir Abbas, research head at Arif Habib Ltd (AHL), said that the PTI government was faced with a serious commodity crisis soon after coming into power. The ECC had allowed the export of one million tonnes of sugar in October 2018 which led to serious shortages in the domestic market.

He added that exporters benefited significantly from sugar subsidies and high prices while consumers also braved shortages in wheat supplies.

Mr Abbas said that an inquiry commission was set up to investigate allegations of hoarding and mismanagement. He said Covid-19 can also be blamed in further pushing up commodity prices. The government intervened thro­ugh support prices and impo­­rt of sugar and wheat to add­ress shortages as well as pricing.

Head of Research at Pak Kuwait Investment Samiullah Tariq was of the view that more or less, the country’s inflation had been driven by global commodity prices and movement in the rupee-dollar exchange rate.

He said the demand and supply situation in essential commodities like wheat and sugar had not remained ideal but prices were also affected by global factors and the exchange rate.

Mr Samiullah did not agree that the government had ignored increase in prices of food items saying the prices had risen significantly owing to an increase in global commodity prices.

Atif Zafar, Research Director and Senior Economist at Topline Securities, attributed rising food prices to soaring international prices of food items especially sugar, wheat and palm oil which in turn resulted in higher domestic prices. Higher global oil prices have also pushed up the cost of doing business and consumers have seen prices of some local items rising, he said.

Commodity expert and Convener of FPCCI Standing Committee on Pulses Anis Majeed said one of the problems of the government was lack of the right person at the right job which led to serious wheat and sugar crisis.

The weekly meeting of NPMC had been looking at things from the top instead of looking at ground realities, he said.

He said the sugar trade had been in the hands of 80 mill owners whose product had been moving freely and going into hoarding but the government machinery could not take notice.

He said wheat crop instead of coming into the city after harvesting had been taken to some other places for hoarding purposes.

Karachi Retailers Grocers Association (KRGA) General Secretary Farid Qureishi said the government did take price relief measures but failed to implement them owing to lack of coordination among the provinces. Even at the utility stores, the prices had been crawling up for the last three years.

On the one hand the manufacturers of confectionery, bakery and powdered milk items have been increasing prices while on the other hand they have been reducing the weight of their products.

Referring to substantial rise in prices of wheat flour, sugar, cooking oil and ghee products, he said it seemed the government had never bothered to take manufacturers to task for artificial price hike in the name of rising exchange rate parity and raw material costs.

Mr Farid said that unfortunately the government has not only utterly failed in recovering large quantities of hoarded sugar and wheat, but also been unable to dismantle the mafias who still have been ruling the commodity markets and manipulating the prices of essential goods.

Published in Dawn, August 19th, 2021

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