Hi everyone! I hope you are all doing well. Welcome back to another blog. This article will discuss the topic in detail “Essential Commodities are Out of Reach for Pakistanis”. In recent years, many Pakistanis have found it increasingly difficult to afford essential commodities such as food, fuel, and medicine. Stagnant wages and a struggling economy, combined with the rising cost of living, have left a significant portion of the population struggling to meet their basic needs.
Pakistan’s rural sector is experiencing a tighter and more persistent form of inflation, while companies and industries in urban areas are facing multi-decade highs of inflation and unemployment, with no sign of relief in sight.
The Pakistan Bureau of Statistics has released the latest data indicating a YoY increase in inflation to 36.4 percent, surpassing the previous month’s increase of 35.4 percent. In terms of monthly changes, the data shows a 2.4 percent rise compared to March 2023.
Food inflation is alarming as essential commodities have witnessed an increase of 46.8 percent in urban areas, with rural settings experiencing the worst impact where the number has reached 52.2 percent.
Reportedly, inflation has seen its highest yearly increase since data collection began in 1965, but the cause of this phenomenon is obvious.
The currency is experiencing record depreciation, and several factors are contributing to this, including the pandemic’s aftermath, political instability, the uncertain status of the IMF program, surging food and energy costs, and slow recovery from flood damages. The Finance Ministry anticipates a continued increase in the coming months.
Since February, negotiations have been stalled and the country does not currently have an IMF Programme as of November 2022. Although financial support from Saudi Arabia and UAE has been confirmed, the signing of the staff-level agreement that would release $1.1 billion has been delayed for months.
IMF and Finance Ministry officials are blaming each other for the delay. While the IMF is waiting for commitments from the World Bank, Asian Development Bank, and commercial banks. In order to curb inflation, the State Bank of Pakistan has increased interest rates by 300 points in March and 100 points in April. The SBP Monetary Policy Committee (MPC) is expected to announce another rate hike at its scheduled meeting next month due to the skyrocketing inflation.
Food Inflation
The price of wheat experienced a significant increase of 103 percent on a YoY basis. The historically devastating floods caused damage to 8.3 million acres of cropland. They were the primary driver behind this price surge, apart from macros. This increase in wheat prices marks the third-biggest increase seen in the country.
Delayed sowing, unchecked smuggling, and hoarding. It is a record hike in fertilizer prices due to energy shortage and the imposition of a super tax. That are the causes of the increase in prices. The government’s excess footprint in the sector and unaddressed supply chain issues are contributing to the problem.
Devastating floods and continuing exports have led to an 87 percent increase in rice prices. That is Pakistan’s second-biggest crop after wheat. Furthermore, annual production has declined by 30 percent.
Pakistan’s annual production of rice has decreased by 30 percent. Due to devastating floods and continuing exports, resulting in an 87 percent increase in prices. Rice is the country’s second-biggest crop after wheat and contributes 2 million tons to the national food requirement.
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