- Surging prices of essential commodities, food items immense burdens on consumers
The observance of Ramazan holds deep spiritual significance for Muslims worldwide, symbolising devotion, self-discipline, and reflection. However, in recent years, Pakistan has faced the challenge of navigating heightened economic strain during this sacred month. The inflation rates, which have been steadily increasing, intensify during Ramazan, placing additional burdens on the country’s economy and its people.
With this year Ramazan, experts and analysts attribute this economic pressure to various global factors, including economic volatility on the international stage, fluctuations in exchange rates, and unpredictable shifts in commodity prices. These external forces exert an indirect yet significant influence on Pakistan’s economic landscape, exacerbating inflationary trends and contributing to the escalation of prices during Ramazan.
As devout Muslims fulfill their religious obligations with fasting and prayer, they also contend with the harsh realities of economic instability, grappling with the impacts of rising costs on their daily lives. This intersection of spiritual observance and economic challenges underscores the importance of addressing economic vulnerabilities and fostering resilience within Pakistan’s economy, particularly during periods of heightened significance like Ramazan.
Speculative pricing practices, driven through market speculation, hoarding, and artificial scarcity creation, exacerbate price volatility and undermine consumer welfare, perpetuating inflationary pressures. To mitigate the adverse impacts of inflation, mainly during Ramazan, concerted attempts and targeted interventions are imperative. Improving the efficiency and resilience of supply chains through infrastructural improvements, technology integration, and streamlined logistics can alleviate supply constraints and stabilise prices. Implementing robust price control mechanisms and intensifying market monitoring initiatives can curb speculative pricing practices and ensure the affordability of essential commodities for consumers.
Adopting prudent fiscal policies, including rationalising taxes and subsidies, reallocating resources towards social safety nets, and improving agricultural productivity, can alleviate inflationary pressures and foster economic sustainability.
In 2024 prices of essential commodities, including food items, skyrocket, placing immense burdens on consumers, mainly those from lower-income brackets. The inflationary pressures persist, posing multifaceted challenges to the economy and society at large, despite sporadic interventions and policy initiatives.
As per the Pakistan Bureau of Statistics (PBS) statistics, the weekly inflation, measured through the Sensitive Price Indicator (SPI), sustained its uptrend for the 4th consecutive week. It surged 32.89 per cent in the week closed March 14 as against to the corresponding week of previous year. The rise in the SPI reading was led chiefly by the price of tomato, which surged 21.96 per cent to Rs166.58 per kg in the week under review as against to Rs136.59 per kg in the previous week. The second major boost to inflation came from bananas, which became costlier by 21.76 per cent to Rs187.22 per dozen as opposed to Rs153.76 per dozen in the prior week. Egg prices shot up by 7.15 per cent to Rs277.11 per dozen as against to Rs258.63 per dozen a week earlier. Onion got costlier by 5.57 per cent to Rs251.58 per kg from Rs238.30 per kg. The price of liquefied petroleum gas (LPG) went up by 4.45 per cent to Rs295.35 per kg as against to Rs282.78 per kg in the past week. Prices of other goods were rose up to 4 per cent which included garlic, mutton, beef, chicken, georgette, shirting and long cloth. During the week under review, as per PBS out of the 51 items covered through the SPI basket, prices of 18 (35.29 per cent) items grew, 10 (19.61per cent) items declined and 23 (45.10 per cent) items remained equal.
Suspension of export
Meanwhile, the Government of Pakistan temporarily suspended exports of onion and bananas during Ramazan, until April 15, to stabilise prices in local markets. Despite concerted attempts, the trajectory of inflation remains chiefly unchecked, casting a shadow over the festive spirit and exacerbating economic hardships. Various interconnected elements contribute to the surge in inflation during Ramazan in Pakistan. Inefficient supply chains, compounded through logistical issues and disruptions, often lead to supply crisis and bottlenecks, driving up prices of essential goods. Increased demand for food items and consumer goods during Ramazan exerts upward pressure on prices, as producers and retailers capitalize on heightened consumption patterns, further exacerbating inflationary trends.
Fall in purchasing power
It is also important to record that ahead of Eid-ul-Fitr the prices of traditional footwear like shoes, chappals, and Peshawari chappals, have recorded a steep rise, attributed mainly to inflationary pressures. Shopkeepers report a fall in consumer purchasing power, resulting in a greater than 50 per cent drop in sales of various sorts of footwear in this Holy month of Ramazan. Data showed that the average buyer now opts for additional affordable options, mainly slippers and shoes priced between Rs1,000 and Rs1,500, mindful of budget constraints.
Sources also notified that sales of various footwear types, counting Peshawari chappals, Kheri, cut shoes, kolhapuri, nagra, chappals, and khussay, have recorded a fall of 30 to 40 per cent. Furthermore, escalating energy costs, including electricity and fuel prices, inflate production and transportation expenses, subsequently translating into higher prices for goods and services across the board.
Measures needed
Policy inefficiencies, including inconsistent monetary and fiscal measures, coupled with structural deficiencies in governance and regulation, hinder effective inflation management policies, perpetuating economic unrest.
Identifying responsibility for price hiking in our country involves a complex interplay of determinants involving both external and internal stakeholders.
The Government of Pakistan bears significant responsibility for ensuring economic stability and regulating prices by effective policy formulation and implementation. Moreover, fostering public awareness and promoting consumer education are integral to empowering individuals and communities to navigate inflationary pressures and safeguard their socioeconomic well-being during Ramazan and beyond.
Presently SBP announced its key interest rate at 22 per cent as expected for a sixth straight policy meeting as inflation risks continued to loom. SBP said that although the inflation rate had eased in February, it remained high and subject to risks. This warrants a cautious approach and requires continuity of the current monetary stance to bring inflation down to the target range of 5-7 per cent by September 2025.