Everyone knows that domestic prices of consumer goods started to take a hit because of the invasion of Ukraine and fears of consequent price hikes on the international market. The wholesale prices of major consumer goods went up.
The increase in the global prices of essential commodities especially oil and gas understandably affected the local market too. Moreover, a combination of greed, fear, and speculations took the prices up.
Apart from edible oil, wholesale prices of rice, wheat, and sugar reportedly rose, as that of other food and non-food items. To justify the price hikes, traders talk of fears of global fuel prices rising in the wake of the Gaza-Ukraine crisis.
There are also fears of disruptions in the global supply chain, leading to an increased demand for advance purchases. The rising demand for products ahead of Ramadan is also causing a hoarding spree. It may not be long before the debilitating effects of all this hit the retail market too.
Our deep concern is what this means for ordinary consumers. They stay overwhelmed by skyrocketing prices of almost all essential items amid talks of another round of tariff hikes for gas, water, and electricity.
The cost of living has significantly gone up. A typical middle-class resident needs more than Rs. 50,000 a month to meet the basic needs of a family of four. The truth is that the majority of people do not even earn that amount.
A grotesque testament to their actual buying ability of late has been a growing pile of videos showing people running after the open market sale trucks. People from middle-income groups are now frequenting these trucks, meant for selling products at controlled prices to the poor and low-income groups, too.
If the heart-rending scenes unfolding on the streets are anything to go by, large numbers of people are falling through the cracks. Apart from a routine pledge of strict punishment for unscrupulous traders manipulating market prices, we have yet to hear of any concrete action.
Amid a deep-seated economic crisis, inflation is hovering at 30 percent, close to 40 percent of people live below the poverty line, and the debt-to-gross domestic product (GDP) ratio has climbed to 72 percent. Pakistan’s new government will have to contend with these and an aging public infrastructure.
The inability of successive governments to invest in Pakistan’s National Transmission and Dispatch Company has left it prone to failure as with other state-owned firms,
More recently, the COVID-19 pandemic and energy supply challenges dampened Pakistan’s growth prospects and constrained efforts to diversify its export base away from low-value-added products – such as cotton and rice – to higher-value goods.
In late 2022, meanwhile, monsoon floods displaced eight million people and cost the country $30bn in damage. The loss of cotton crops ravaged the country’s textile industry, a key source of exports. In all likelihood, Pakistan’s growth rate fell into negative territory in 2023.
Pakistan, which imports much of its food and fuel, consistently records large trade deficits. Owing in part to elevated commodity prices, foreign exchange reserves dwindled to less than one month of imports last May, leading to shortages of vital goods.
The following month, Islamabad narrowly avoided default after it secured a $ 3 billion loan from the IMF – its 23rd fund program since 1958. However, the lending package came with strict conditions and unpopular reforms.
As part of the deal, the government agreed to impose new taxes on its faltering power sector. It also agreed to lower utility subsidies, which led to sharp hikes in electricity prices, hitting poorer households particularly hard.
Rising essential commodities’ prices, continue to strike ordinary people. Efforts to reduce prices and control inflation should be more effective.