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Tuesday, July 5, 2022
EditorialPangs of inflation

Pangs of inflation

The month of May recorded inflation to be at a whopping 13.8 percent, the highest level in 28 months. The increasing prices of petroleum products have resulted in a subsequent increase in the price of all other commodities as well. Inflation has been on the rise since March, however, the previous government’s decision to freeze oil prices slowed down the increase in prices of other items. However, on May 26, the new government as per International Monetary Fund’s ruling put an added burden of Rs30 on consumers of petrol and diesel. The step is, in fact, the withdrawal of subsidies, whereas the government has yet to put taxes on petroleum products. The spillover effects can already be witnessed as prices of all items are exponentially on the rise.

The Pakistan Bureau of Statistics announced the Consumer Price Index (CPI), the Sensitive Price Index (SPI) and the Wholesale Price Index (WPI), all of which saw an incremental rise in this fiscal year. The CPI stands at 13.8 percent, the SPI at 14.1 percent and the WPI at 28.1 percent. The double-digit indicators present an alarming situation for the country and the common man is the main target facing the brunt of the government’s poor economic policies. What is more alarming is that this is just the beginning, Federal Finance Minister Miftah Ismail has already pointed towards a further increase in petroleum prices which will in turn inflate prices of all other items.

As of now, the common man faces high levels of inflation whenever he purchases any item. Transportation costs have reached an unprecedented level and the withdrawal of subsidies on cooking oil and ghee has led to the rise in their prices by Rs208 and Rs213 to Rs555 per kg and Rs605 per litre, respectively. The spillover effects of rising fuel costs have led to the rise in transportation costs which has increased the prices of vegetables, eggs, meat, pulses and other food items as well.

To curb imported inflation, the Pakistan Muslim League-N-led coalition government has placed an import ban on many items which include both raw materials and finished goods. This has led to a shortage and is expected to increase the prices of many items. Moreover, the currency has also dipped which has further exasperated import-led inflation. If corrective measures are not taken well in time the consequences can be devastating. The government should focus on providing relief to the common man as rising prices are only making the lives of those already living on meagre incomes extremely difficult. Blanket subsidies are not a nice idea, but targeted subsidies should be introduced and should not be withdrawn. Policies should be implemented which will allow for prices to remain constant, if not decrease as any more price hikes will break the backs of people. Side by side, the public should understand that inflation is an international phenomenon, and these pressing times should be tackled with prudence.

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