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n Pakistan, there are two separate mechanisms for price control. Each has a different reasoning on why price hikes take place. Of these, profiteering and hoarding have attained popularity as the reasons causing inflation. TV channels keep blaring programmes after programmes on price checking in bazaars and mandis and newspapers keep publishing report after report about price checking in bazaars and raids by teams of officials to detect and seize goods that are being hoarded. Both are trying to show that the government is doing all it can to control prices.

However, at the official level another completely different set of factors is identified behind price hike. In communications and agreements regarding inflation with international economic agencies such as the International Monetary Fund and the World Bank, the Government of Pakistan never mentions rate lists, price monitoring to curb profiteering or its anti-hoarding drives.

In its official statements on inflation, the State Bank of Pakistan never mentions the number of raids conducted to prevent hoarding or the amount of fines handed out for profiteering as the means to control inflation.

Instead these communications and agreements identify monetary policy instruments, such as the interest rate, the money supply and exchange rate as the determinants of inflation. More importantly, these communications regularly mention the ability of the government to control inflation through policy by manipulating these variables. The anti-hoarding and price control laws empowering administrative actions to check prices and hoarding never mention the interest rate, money supply or exchange rate as factors in price hike. Neither of these two mechanisms recognises the other.

Despite the imposition of anti-hoarding and price control fines since 1973, when these Acts were promulgated, inflation and price hikes have continued. While this schizophrenic policy confusion prevails inflation keeps rising at unacceptable rates and is by far the number one issue facing the public. This is repeatedly demonstrated in all the public opinion polls conducted by independent polling organisations year after year. The public is livid regarding the spectre of continuously spiralling price hikes, and rightly so. This begs the question, which one of the separate and distinct mechanisms is actually responsible for price hikes.

On close examination it is clear that as a means to control prices anti-hoarding and price control raids and price monitoring are a total farce. In fact, the increase in cost of doing business caused by these fines and seizures often results in further aggravating the problem as economic actors in the market pass these costs on to the consumer.

The anti-hoarding and price control acts mainly purport to control prices by exacting fines on those sellers of essential goods who charge prices higher than those stated in the officially issued price lists by the district administration. These fines are imposed for selling essential items listed in the schedules of the anti-hoarding and price control acts mostly a few paisas or rupees above the officially issued price list. However, a comparison of the price list from just one year ago shows that prices of many items have increased by more than one hundred rupees. The real problem for the consumer is not the few paisas or rupees a vendor may charge above the official price. Rather, it is the hundreds of rupees in annual increase that the price list itself is officially admitting as valid/accepted inflation. If the anti-hoarding and price control acts are successful at controlling prices why are they themselves legitimising large price increases year after year?

The government, of course, knows the truth that price control through magistrates is a farce. This is why the Government of Pakistan at one point deleted the entire list in the schedule of items whose prices are to be controlled under the banner of market reforms thereby, essentially unplugging that purported mechanism of price control. This was followed by a reinstatement of such lists a few years later as an excuse to cover-up the mismanagement of the monetary policy variables in the interregnum that were actually causing the inflation thereby deflecting the blame onto the provinces in order to keep the public distracted and to avoid scrutiny of a devious monetary policy and economic mismanagement.

The Competition Commission of Pakistan has also weighed in and in this respect officially communicated similar views in a report and subsequent policy note about price control through raids and price monitoring actually potentially worsening the situation.

The current government has recently promulgated yet another law to use anti-hoarding and price control mechanism to control prices with full knowledge of its futility. As long as the government keeps lying to the people about the real causes of price hike there will be no relief. This government will also continue to reward a select segment of the economy who benefit from the manipulation of the interest rate, money supply and the exchange rate.

Public intellectuals and the media must run a campaign to identify and popularise the real causes of inflation as well as its beneficiaries. Only then will the mischief begun in 1973 be put to rest and the public get relief.