While most of the attention since the US-Israel war on Iran kicked off back in February has focused on fuel prices, one could argue that food inflation is even more painful for the vast majority of Pakistanis. There are ways to blunt the impact of fuel inflation. The most straightforward is to simply travel less or use less power when at home. It is rather harder to curb one’s food consumption, especially in a country where malnutrition is already widespread and an estimated 40 per cent of children under five years are stunted or too short for their age. As such, the spike in the country’s food inflation is one of its most worrying economic trends. Short-term inflation, as measured by the Pakistan Bureau of Statistic’s Sensitive Price Index, rose 13.52 per cent year-on-year (YoY) in the week ended July 2. The data showed a trouble increase in the prices of food items compared to last year, with tomatoes rising by 238.72 per cent, wheat flour by 68.47 per cent and onions by 80.96 per cent. This is a country where most cannot afford meat every day or even every week, but even mutton is around 16.0 per cent more expensive than last year.
One should note that this is happening at a time when fuel prices have actually come down from the peaks seen in recent months, though that might now reverse given that the US has turned to strikes again. Sharp increases compared to last year are perhaps inevitable, given that rising fuel costs have a multiplier effect that generally makes everything else more expensive. However, the data shows that food prices are actually going up on even a weekly basis. While inflation data for the month of June showed a calmer picture, with food inflation remaining below the overall inflation rate, it still came in at 8.2 per cent in urban areas and 9.4 per cent in rural areas, which is still pretty steep. Have lower fuel prices simply not had an impact? If so, why? Underneath the fuel problem, however, lie even deeper crises. Pakistan is one of the countries most vulnerable to climate change, and both extreme heat and floods have already done considerable harm to the agricultural sector that produces our food. Beyond climate change, a new research report issued by Ampic Strategies titled ‘Sustainable agriculture in Pakistan: can Pakistan meet its future food requirements?’ has reportedly said that decades of weak governance and policy failures play a significant role in Pakistan’s agricultural crisis. It points to problems like inefficient irrigation, doubly important in the context of declining per-capita water availability, overuse of pesticides and declining soil fertility.
These are issues that will stay with the country long after the fuel crisis is over and they will likely drive up food prices over the long-run, if not dealt with. A country that already has a severe malnutrition crisis simply cannot have food prices trend in the wrong direction. Policymakers have to seriously look in to why food prices seem to consistently remain elevated in this country and also come up with a workable strategy to solve the longer term problems ailing the agricultural sector. It is one thing to be priced out of a car, an AC or even running your fan all day. It is quite another to be priced out of roti.
