The sacred month of Ramazan is a month of blessings and giving. Ironically, no sooner does the fasting season begins..........
inflation
The sacred month of Ramazan is a month of blessings and giving. Ironically, no sooner does the fasting season begins, it is accompanied by a financial burden as prices of basic items spiral. In other countries, festivals are source of joy for the people. There would be various deals and discounts available so that the people can celebrate fully. Apart from their own festivals, these countries are now also holding sales during Ramazan for Muslims to offer them some relief during this month.
Even though Pakistan is a Muslim country, everyone expects (read: dreads) the hike in prices. This year, sadly things have not been different despite the new government’s promises to the people. The burden of all ‘expenses’ and corruptions is carried by the people of Pakistan. And since incomes don’t increase at the same pace as inflation, homemakers are struggling to make their restricted budgets meet the necessary expenses. Important food items like meat, fruit, milk and even bread seem like luxuries to many, which leads to people cutting out some important things and making them secondary.
Like every year, before Ramazan, the government announced that many food items would be subsidised and provided to the utility stores across the country. However, by the beginning of the second week of Ramazan, many essential items like flour, cooking oil and sugar were not available at the utility stores. Apart from this, the ‘bachat bazaars’ (markets with subsidised rates) were not following the ‘official fixed prices’ and were minting money off the customers.
The current situation for the average Pakistani seems quite dreary. Meat has become a luxury for many and there are people who would only eat meat during Eid-ul-Adha. According to some estimates, the price of bread has risen by 8% and now the price of a mini loaf of bread is Rs 30, from its earlier price a few weeks ago of Rs 27. Small loaves of bread have increased to more than Rs 50 from Rs 45, large loaves are now Rs 90 from Rs 80. Sugar which is one of the main items used during Ramazan is now Rs 70/kg from Rs 65/kg earlier. Shopkeepers say they are forced to increase the price of sugar since the rates are also increasing in the wholesale markets.
Other items that are vital for daily use, and more so during the two vital meals during the fasting month, saw a drastic price hike. The rate of onions has increased by 100% taking the price of a kilo of onion from Rs 30/kg to Rs 60/kg in 2 months. Potatoes have increased from Rs 40 to Rs 60 per kilogram, and tomatoes which were Rs 40 per kilo before Ramazan are now Rs 60 per kilogram. For fruits, apples per kg have gone from Rs 120 to Rs 150-200.
While economic experts and the government are hoping for things to get better, people are finding it unbearable to pull through. The buying power is shrinking for the common man. Despite official claims of betterment, the small businessmen are complaining of bad business and slow market. Adding fuel to fire (literally) are the increasing petrol prices with speculations that the price of one litre will reach Rs200-Rs250 which means that this will trickle down and further spike the prices of all items. It doesn’t help to know that the price of petrol in the global market has fallen. The dollar stands at around Rs147 and its value will rise as the rupee further devalues.
Another problem that persists is that vendors are putting up prices of their choice, as there seems to be very little accountability. If questioned, they quote the PM and other officials, saying that the prices are increasing at all levels even in the wholesale markets so what are they to do. The vendors also quote the IMF, the devaluing of the rupee and increase in the petrol prices. And these people are not far from the truth.
The IMF ‘bailout’ package may be good for the long-run to improve the situation of the country but many see this as poor choice. The domestic budget which is bearing the basic expenses will now be forced to constrict further, leading to many other priorities being set aside. And as the taxes increase, middle-income group will bear the brunt of it.
In a recent statement, the IMF’s Ernesto Ramirez Rigo, who led the team to Pakistan said, “Pakistan is facing a challenging economic environment, with lacklustre growth, elevated inflation, high indebtedness, and a weak external position. This reflects the legacy of uneven and procyclical economic policies in recent years aiming to boost growth, but at the expense of rising vulnerabilities and lingering structural and institutional weaknesses. The authorities recognise the need to address these challenges, as well as to tackle the large informality in the economy, the low spending in human capital, and poverty. In this regard, the government has already initiated a difficult, but necessary, adjustment to stabilise the economy, including through support from the State Bank of Pakistan. These efforts need to be strengthened. Decisive policies and reforms, together with significant external financing are necessary to reduce vulnerabilities faster, increase confidence, and put the economy back on a sustainable growth path, with stronger private sector activity and job creation.”
While this step would cause our currency to devalue, the government claims things to get better in the long-run, and this may be true. However, for majority of the population, they need relief now in order to enjoy the gains in the future. Will the government be able to help keep them financially afloat to survive until that times come in the future? Or would they be pushed more towards the poverty line? Only time will tell.
