Rising inflation
In news that surprised no one, the Pakistan Bureau of Statistics said inflation continues to rise, standing at 9.2% in October, a four-month high. It also went against Finance Adviser Shaukat Tarin and Planning Minister Asad Umar’s prediction last week that inflation numbers would show a downward trend from September. The number was a slight increase over the 9% figure for September and was influenced in no small part by the crashing rupee, rising global oil prices, and a significant increase in domestic food prices.
More worrying than the headline number, however, was the government’s reaction. Tarin reportedly said global commodity prices “are not in my control”, perhaps forgetting that using subsidies to lessen the impact of global price hike is very much within the government’s control. Also, given that Pakistan is now importing staple items such as wheat, sugar, and pulses, it is deeply concerning that the default answer to rising prices is “not my fault” rather than “we will fix it”. We must also note that the government has failed to act on past promises to manage the prices of essential food items, such as the unfulfilled assurance that duties and taxes on cooking oil would be cut soon.
Tarin also blamed the Covid-19 impact on global supply chains, which in turn has affected commodity prices, but if we are to run with this argument, we must also note that Pakistan remains a country that prides itself on agriculture and also had much shorter and looser Covid lockdowns than several other countries. These factors should have meant that domestic agriculture output should have compensated for international supply chain issues, but unfortunately, due to flawed policies and food stock management, this has not been the case. Instead, food prices for several essential items have been outpacing headline inflation. With the rupee predicted to decline further and no substantial price control measures on the horizon, everyone should be ready for further hits to their wallets.
Published in The Express Tribune, November 4th, 2021.
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