WITH the fasting month of Ramazan approaching, the national economy has been experiencing a mixed inflationary trend over the last couple of months. The overall inflation dropped significantly to 2.4 per cent in January, the lowest in nine years. Yet the prices of essential commodities remained volatile, raising concerns for millions preparing for the month of fasting.
While the State Bank of Pakistan (SBP) has aggressively tightened monetary policies, and the rupee has been stable, nothing has resulted in relief for the common man.
Food inflation, which is a rather critical indicator during Ramazan, has remained stubbornly high, with staple items, such as flour, sugar and cooking oil, seeing price hikes ranging between 9pc and 15pc. The cost of essential Ramazan items may still strain households, as weekly data from the Sensitive Price Indicator (SPI) has shown a 0.27pc rise in February, particularly due to rising prices of fresh fruits, poultry and dairy products, with bananas increasing by 11.89pc, eggs by 7.80pc and chicken by 4.47pc.
As such, the data clearly indicates that despite the government’s efforts to control inflation through price monitoring mechanisms and Ramazan-specific relief programmes, the impact on household expenses remains substantial.
Although the Utility Stores Corporation (USC) has announced a Rs5 billion relief package, history suggests that shortages and black-market pricing would limit its effectiveness, particularly in rural areas where access to subsidised markets is often restricted.
In 2023, there was a reported 20pc drop in Zakat contributions due to economic hardships. There is concern that a similar trend could continue in 2025, affecting community welfare programmes and free food distributions that rely on donations. This will add to inflationary pressures.
The ongoing negotiations with the International Monetary Fund (IMF) for debt restructuring require fiscal tightening, which could lead to additional indirect taxation or subsidy cuts, affecting most consumers’ purchasing power. Although inflation is projected to remain between 2pc and 2.5pc in the coming months, the volatility in food prices suggests that the true impact of inflation during Ramazan would be felt at an individual and community level.
Economic experts believe that unless supply chain disruptions are effectively managed and market regulations are strictly enforced to prevent hoarding and continuous artificial price hikes, Pakistanis may face serious financial strain. This may make Ramazan this year a test not only of faith, but also of economic resilience for millions across the country.
Faria Ali Dehraj
Nawabshah
Published in Dawn, February 28th, 2025
