An analysis of price hike in Pakistan – by Dr Farrukh Saleem
Capital suggestion:
Price hike
Just before Election 2008, the average retail price of Dal Masoor (pulse) was Rs64 per kilogram. Dal Masoor now sells for Rs129 per kilogram; that’s up a whopping 101 per cent. In 2007-2008, the average retail price of sugar was Rs27.67 per kilogram. Sugar now sells for Rs70 per kilogram; that’s up a mammoth 152 per cent. Just before Election 2008, the average retail price of wheat flour was Rs17.14 per kilogram. Wheat flour now sells for Rs31 per kilogram; that’s up a wholesome 80 per cent.
For a fact, every three out of four Pakistanis make Rs160 per day or less. That means 140 million Pakistanis can only buy a kilo of Dal Masoor plus a kilo of wheat flour a day — and live happily thereafter.
The day that Makhdoom Syed Yousaf Raza Gilani took oath as the prime minister of Pakistan, OPEC basket price stood at $96.49 per barrel. OPEC basket price now stands at $76.90 per barrel; a decline of 20 per cent. The day that Makhdoom Syed Yousaf Raza Gilani took oath as the prime minister of Pakistan, the maximum ex-depot sale price of premium motor gasoline was Rs62.81 per liter. The maximum ex-depot sales price of motor gasoline now stands at Rs71.21; up 13.37 per cent.
In 2008, the average price of natural gas in the US was $8.86 per MMBTU (one million British Thermal Units). In 2009, the average price was down by 55 per cent (currently, the price is around $5.50 per MMBTU, down 38 per cent from its 2008 level). In 2008, Canadian wheat was quoted at $454 per metric ton and the same now stands at $283 per metric ton; a drop of 37 per cent. The price of meat in the international market hasn’t budged much over the past two years while the price of mutton in Pakistan has gone up from Rs234 per kilogram to Rs400 per kilogram. The conclusion being that prices in the international market move up and down while in Pakistan the direction is only up, up and further up.
Well, there are three possible culprits behind the recent price hikes in Pakistan: imported inflation, devaluation and cartelisation. When the price of oil in the international market goes up, oil costs more in Pakistan, transportation costs go up and as a consequence, the general price level moves upwards. Intriguingly, over the past two years, the price of oil in the international market has actually gone down by 13.37 per cent (in dollar terms). In effect, translating that dollar-based decline in rupee terms would mean a price hike of 20 per cent (as the rupee depreciated by 33 per cent). There we have imported inflation and devaluation both working at jacking up the price level in Pakistan.
Next is cartelisation. Between Zufiqar Ali Bhutto and Yousaf Raza Gilani so much industry — and banking — has been privatised but government after government failed to establish a strong anti-monopoly authority. Amazingly, dictator Musharraf gave us the Competition Ordinance 2007 under which was established the Competition Commission of Pakistan (CCP). Amazingly, our democratically elected prime minister has let that ordinance lapse. In essence, the general sided with the people of Pakistan while the elected executive has sided with the cartels.
The writer is a columnist based in Islamabad. Email: [email protected]
Source: The News, 28 March 2010
actually cartelization is the main reason not only for price hike but also for unacceptale disparities in the society.So we have to address the issue not through artificial price control mechanism but liberating the national resources from the cluches of few which has emerged as a new elite class in pakistan.