KARACHI, Sept 28: The performance of the PPP coalition government has not been enviable when it comes to containing price surge, particularly food inflation, over the last three-and-a-half years. The recent rains and floods in Sindh wrecked havoc as standing crops on hundreds of acres were destroyed.

The fear of crop shortfall and depressed supplies of green vegetables has again energised the price graph crawling northward.The provincial and the city governments seemed to have failed to check mismanagement in commodity markets perceived to be controlled by manipulators and extortionists.

In the absence of a workable system of price check, wholesalers, retailers and others along the supply chain turn situation of excess or shortage in their favour at the cost of consumers.

In March 2011, the government raised special excise duty (SED) to 2.5 from one per cent which was immediately passed on to the end users by the manufacturers of local goods. When the SED was removed in July 2011, the manufacturers are yet toannounce any price cut.

The government has still not rechecked with the companies for depriving consumers from tax benefits.

Even many companies did not pass on the impact of one per cent cut in general sales tax (GST) to consumers.

The non-serious attitude of the government to control prices also encouraged manufacturers to keep raising prices four to five times in a year.

A price comparison chart (from March 25, 2008, the day Prime Minister Yousuf Raza Gilani took oath, to Sept 25, 2011) is presented here to analyse the price trend during the last few years.

Farhan Mahmood, Vice President, Head of Research and Business Development, Topline Securities, said the inflation as measured by CPI jumped by approximately 40 per cent in last three years.

He added that due to rebasing and reclassification of CPI, the CPI index is quoted for July 2008 instead of March 2008.

Pass-through of subsidies on oil, higher electricity tariffs due to greater reliance on FO based (furnace oil) power plant and gradual reduction in electricity subsidies stood as the prime culprits in higher inflation.

He said rupee value eroded from Rs62.80 against US dollar in March 2008 in the inter-bank market to reach Rs87.3 currently. This is mainly due to pressure on dollar reserves, especially in FY09, when oil prices sky-rocketed which led Pakistan to go for an IMF programme.

He said interestingly, though international oil prices remained almost the same compared to March 2008, 28 per cent erosion in rupee against the dollar led local petrol prices to increase by 35 per cent. However, price of diesel which accounts for more than 45 per cent of oil consumption in Pakistan rose sharply by 110 per cent as government eliminated oil subsidies to reduce its deficits in line with IMF directives.

Farhan said the Karachi Stock Exchange index during last three-and- a-half years fell by 27 per cent to 11,070 points compared to 15,268 points while investor’s wealth in rupee terms eroded by 31 per cent to Rs3 trillion as compared to Rs4.2 trillion on March 25, 2008.

He said weighted average increase in the gas price for residential consumers (up to 100 cubic metres) surged by 30 per cent — from Rs82.1 per mmbtu to Rs95 per mmbtu.

The gas tariff for residential users above 500 cubic metes soared to Rs1,006.4 per mmbtu from 688.4 mmbtu. This is primarily due to rupee devaluation as local well head gas prices are also linked with international oil prices denominated in dollar terms. Power tariff for residential users (consuming kwh exceeding 200-700 units) went up to Rs10.7 from Rs6.5 per kwh, up 65 per cent while tariff for life-line consumers which consumes around two per cent of total electricity increased by only 17 per cent. The 50 kg cement bag price is now tagged at Rs411 as compared to Rs266, Farhan said.

People have been expecting that the PML-N would raise voice on high cost of living. Hardly other coalition partners, like ANP, PML-Q and MQM ever backed consumers for protecting their rights and even they did not show any anger on streets on price-hike. High bumper crop of wheat and other commodities did not provide any relief either because of their high support prices or because of markets forces who made billions of rupees.

The country saw yarn crisis and high cotton prices making an increase of 30 per cent in locally produced fabrics. The circular debt issue hovering at Rs155 billion in which power sector, PSO, refineries, etc., are holding back their payment is getting worst day-by-day.

No one can deny the costlier imports of goods on the back of falling rupee value against the dollar, coupled with rising prices in world markets but again the government had never checked this justification by manufacturers seriously and its real impact on prices.

The role of the city government in issuing fortnightly prices has nothing to do with consumers’ interest as lists always lacked realistic rates. Besides, half-hearted price checking was enough to satisfy the retailers to continue fleecing people without any fear of being sent to jails or facing heavy fines on the spot.

People, who have voted for their political representatives, are now looking at them for not doing on food inflation issue despite sitting in provincial and national assemblies.

When asked why consumers are silent on high prices, General Secretary of Karachi Retail Grocers Group (KRGG), Farid Qureishi, said people are actually frightened that they cannot lodge protest as they have stuck up in many issues of life. They know the government would not react on any thing.

One thing is certain that many people have been buying food-stuff as per their requirement rather than making bulk purchases.