The final numbers may be surprising, but the outcome isn’t. The new government in Islamabad chose shock therapy, and the ensuing fits have sent the food price levels into an epileptic seizure. When you floor the brakes all the way down, sometimes you end up losing control. Now brace for impact!
National food CPI was already up 19.4 percent in the first 11 months of the outgoing fiscal year, before the monstrous fuel price shock came into wreak havoc. With HSD up close to 60 percent in June-22, N-CPI (Food) is up by additional 5.5 percent in just one month. Annual food inflation (12-month average) for FY22 at 13.5 percent may not appear a lot during once-in-a-decade commodities price spiral, but it comes on top of 13.2 percent in FY21, and 15.8 percent in FY20. Whether the planet is in a lockdown due to a pandemic or at the brink of a new cold war, the rise in local food prices has been relentless. And the tarot cards say there will be no mercy.
The food component of WPI and rural CPI rose by 7.7 percent and 6.1 percent - month on month - mocking those who insisted that ‘nothing’s worse the pandemic’. Turns out, living is. Both WPI and rural food CPI are leading indicators of what’s next to come. And with HSD prices raised another 14 percent just this weekend, the momentum is not losing any energy. Wholesale grain prices rose by 12.6 percent on average in just one month, vowing to whack the consumers left, right, and center.
From here on, it will take all the creative juices for those who have been vying for power to show they deserve not to be tossed out just as quickly. Whether its takes Dar or Candy-onomics, the coalition government must demonstrate capacity to work together and deliver immediately, because the lifeline consumers deserve a bail out. And if the spectacular mess (also known as TERF debt binge) has taught policymakers any lesson, it is not the size of bailout package that matters. Make it fast, make it organic, and make it impactful.
Already, there are signs that those trained in the olden ways are losing the plot. The yet-to-be crowned prince of Punjab has announced a two hundred billion rupees blanket subsidy on flour, pretending as if most - if not all - won’t be pocketed either by commercial banks or quota flour mills. And bankers shall make hay on ever more state borrowing for grain operations on peak mark up rates against sovereign guarantee. Yet, the supertax hurts!
There are better – nay, proven ways to offer effective relief. The structure for safety net is already there in the form of BISP/Ehsaas, and it needs to be expanded vigorously both in quantum and breadth by diverting funds from untargeted subsidies. Name it after Muhammad Bin Qasim if you will if it helps to bring consensus and sense of urgency to the decision-makers.
Two years since the pandemic, we are already in the throes of load-shedding. With monsoon around the corner, it may soon be followed by floods. Act now and act together, before – heavens forbid - the public vengeance takes the form of final plague.
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