While 2013 has been a tough going in terms of see-sawing fortunes of the items in the core inflation basket, it was also the year that saw the open market rates for staple flour touching its highest peaks in the nations history-an infamy you would think hard to top. But, it is a testament to this nations enduring spirit that households have been paying above Rs90/kg for the seasons new potatoes (of all things) and still managing a good nights sleep at the off.
During the last two months, different market sources have provided varying explanations for the abnormal fluctuations in the prices of kitchen essentials-including the staple potato-onion-tomato trio-with the most common one being it is a supply-demand issue.
Traders have previously said that price hikes for tomatoes in particular can be explained by rising prices of the commodity in neighbouring India-from where comes a large portion of the nations tomato supply.
The soaring prices of potatoes for that matter have been explained away by the delay in harvesting of potato crop in Punjab-which led to a potato shortage in the market allowing sellers to fetch exorbitant prices on their cold storage stock.
However, the supply-demand argument being heard for the better part of the last one month is now getting dated, especially in light of the fact that supply side pressure on all three commodities is slowly easing up.
Now that the new seasons crop for both potatoes and tomatoes has been steadily making its way into the market, surely some sort of easing off on the price front should have emerged? But, no such effect has been witnessed, pointing towards persistent artificial bottlenecks being created in the supply of vegetables.
A wholesaler from Lahores new sabzi mandi, however, denies the claim that hoarding is the cause of these price hikes. Talking to BR Research, he maintained that the wholesale rates of a majority of fruits and vegetables had in fact started softening in the last few weeks as supplies have poured in; however, the effect could not be passed on to the consumers because retailers are still slapping high margins on the produce.
Ibrahim Mughal, Chairman Pak Agri forum also echoes this sentiment, saying that the profiteers are having a field day in the absence of concrete price control protocols and that retailers are abusing the lack of oversight to pass higher costs of diesel and petrol onto consumers.
Only last week, BR Research had a conversation with DCO Lahore, Ahmed Javed Qazi who revealed that the government is implementing a new mechanism that would essentially see the district administrations micro-managing the daily auction of fruits and vegetables in a bid to ensure fair prices.
He also explained that the District Price Control Committees were set in place to monitor the day-to-day retail prices of all commodities relative to their wholesale prices so that sellers could not make profit exceeding more than 15 percent of their costs.
However, the implementation of these mechanisms is yet to show any widespread measurable results, since prices for these kitchen essentials continue to vary wildly at different geographical locations. For people who can make the long commute to the sabzi mandi and the thrice-weekly (dubious) bachat bazaars where produce is being sold under the (abysmally negligent eye) of the district government, savings of a few bucks on every kilo of produce can still be had. But for the rest, itll be a while before we can swallow our food without the accompanying dose of guilt.
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