Global food prices’ impact not fully passed to consumers: govt – Newspaper

KARACHI: The federal government, while acknowledging the fact that domestic prices of essential food items have gone up over the last three years, has claimed that it has absorbed a considerable amount of increase in international prices and has not allowed its full passage to consumers in Pakistan.

A Finance Division statement released in Islamabad on Sunday says it is an unqualified fact that international food prices have witnessed the highest levels in a decade.

Although the chart released by the Finance Division depicts the increase in prices in Pakistan, yet the government, while referring to a report “Govt fails to check surging food prices in three years” published in Dawn on Aug 19 and a follow-up editorial “Hard times” published on Aug 21, said that an ‘unfair’ position has been painted of its efforts to deal with the price situation in the country.

Finance Division says international prices have witnessed the highest levels in a decade

The Finance Division says a comparable position of domestic prices shows that the government has absorbed a considerable amount of increase and has not allowed its full passage to consumers.

It says every single food item has witnessed a much higher international price increase than what has been allowed to be transmitted locally, except for wheat flour. In the case of wheat, the comparable national average shows domestic price increase of only 32 per cent, which is significantly below the international price increase of 51pc.

The Finance Division further says that the economic growth of about 4pc in 2020-21 spurred by the government policies has resulted in an increase of real incomes of all Pakistanis. It claims that on an average the per capita income has risen by 15pc in 2021 as compared to 2020.

In the agriculture sector, where the largest share of population lives and is employed, 32pc growth was observed only in the sub-sector of important crops. This is an additional income that has gone into the hands of poor people as the largest shareholding is in the hands of low-income farmers. Similarly, large-scale manufacturing, where a sizeable labour force and middle-class is employed, has witnessed the largest increase of 14.5pc in over a decade. In this sector, 17pc of additional income has accrued in just one year.

Consequently, sub-sectors of most services are showing remarkable growth. As a result, unemployment has come down in agriculture, industry, housing and construction sectors.

It says the government is making exceptional efforts to stabilise prices and undertake policies which would promote investment, employment and economic growth.

Published in Dawn, August 23rd, 2021