The price of Ramazan

With the arrival of Ramazan, people have been greeted, once again, with exorbitant price hikes. Even though the costs of essential commodities go up a month or so before Ramazan, the customers are really hit when the month starts. Just a week ago, Special Assistant on Economic Affairs Hina Rabbani Khar dismissed the price increase as “a regular feature” and said that the industries ministry had been asked to give suggestions to the Economic Coordination Committee. If these suggestions were given, nothing has come out of them.

The increase in prices, is indeed a ‘regular feature’, and it is a shame that the government, being aware of it, uses it as a justification for inaction. The causes for the inflation are fairly simple: before Ramazan, the hoarders start accumulating stocks. This leads to an artificial shortage, which in turn leads to higher prices. The cycle works both ways as well: the demand of things like flour, sugar etc goes up during Ramazan. When the hoarders can foresee an increase in demand, they accrue their stocks to push up prices even further. In addition, this year, the devastation caused by the floods, with many supply routes being disconnected, has exacerbated the situation even further.

The government should ideally intervene right at the beginning of the cycle. However, with the level of corruption being where it is, usually the hoarders bribe government officials or have the backing of politicians. Another solution can be the government’s formulation of price control mechanisms. This, however, again demands that the government implement its policies efficiently. For example, the Punjab government had formed price control committees and set up Sasta Ramazan Bazaars. However, the Bazaars were missing many essential items and the price control magistrates aren't taking action against hoarders.
Published in The Express Tribune, August 15^th, 2010.