Leading political parties acknowledge price hike to be a major issue and promise to address it by adjusting monetary and fiscal policy if voted to power in election 2007.

Following questions were mailed to leaders of Pakistan Peoples Party, Pakistan Muslim League (Nawaz), Jamat-e-Islami and Muttahida Qaumi Movement. Response of PPP was not received till filing of this report. Positions of other parties are reproduced here.

Questions: 1. Are you convinced that inflation in Pakistan has been under 10 per cent over the last five years or creative accounting was applied to keep it within limits? 2. Do you agree that price hike over the last five years been too steep for a commoner and fixed salaried families? 3. What is the single most important factor that led to the situation where price graph at least in the case of real estate seem to have gone through the roof? 4. If elected to power what is the first step your party will take to reign in the spectre of inflation?

1. Cost of price inflation (as per 2nd Quarterly Report for 2006 of the State Bank of Pakistan) rose from 9 per cent in July 2006 to 12.6 per cent in December 2006. In February 2007, it came down to 10 per cent. But inflation is viewed in the context of cost price index food inflation, this hovered in double digits during most of the eight months from July 2006 to February 2007.

2. Yes, I agree. There is no downward trend since July 2006. The excessive spending on consumer goods due to expansion of credit, including the credit card facilities, the increased flow of black money and the inflow of foreign exchange remitted by Pakistanis have pushed the prices up.

3. True, prices of real estate has rocketed sky-high. Reason is simple. The remittances sent by Pakistanis living abroad, particularly after 9/11.

4. Sustained efforts would be made to bridle inflation and, particularly food inflation by the following measures:

*Increase the supply of essential consumer goods needed by the low and middle income groups.

*Micro-financing for necessities would be provided. For luxury goods liberal credit would not be allowed.

*Ban has got to be imposed on the imported of luxury goods.

1. Inflation as measured by VOI in the past 4 years has been 4.5, 10.1, 9.7, 8.5 per cent, but increase in SPI that affects the common man has been much higher — about 12 per cent.

2. Yes. In terms of SPI, the cumulative increase in the past 4 years has been over 40 per cent, without any corresponding increase in wages and salaries.

3. The liberal monetary and credit policy adopted by the State Bank in 2003 and 2004 to channel excess liquidity generated by large flow of remittances and other capital after 9/11.

4. The first important step by my party will be to give higher priority to agriculture to increase supply of essential food items. It is also important to maintain stable wheat prices throughout the country throughout the year.

1. While the official data is not reliable my own ‘guesimate’ is that inflation is definitely above 10 per cent. As far as food inflation is concerned even the official data puts it above 10 per cent.

2. Yes, definitely. Price hike has made life miserable for the people in general, particularly those in the lower and middle income groups. Fixed salary families are the worst sufferers.

3. In my opinion the most important factor is speculation, fuelled by excess floating money generated by foreign remittances and seriously skewed distribution of wealth in the country, where the uppermost 10 per cent have been the real beneficiaries of the policies of the present government.

4. Inflation is a multidimensional phenomenon and cannot be controlled by rhetoric or sermons. Our priority would be to ensure enough incentives for the production of the essential items so that people could have them at reasonable prices. Monetary and fiscal policies both would be harnessed to achieve this objective. — AS