Over the past two years, national discourse on food prices has been dominated by commodities such as bread, edible oil, pulses, and sugar, arguably ‘staples of the bottom of the pyramid of local population. However, one commodity category has remained missing from the headlines, rising along others in stealth mode.
According to latest weekly SPI, national average retail price of livestock products –beef, mutton and loose milk – have been one of the worst performers in the food basket during 2021, increasing at 21.4, 16.8, and 8.62 percent respectively, over last year.
If year-end price comparison appears odd, 12-month averages offers little relief either. 12-Month average price of average quality per kg beef and mutton rose by 15.3 and 14.5 percent, respectively during CY21 (compared to 12-month average CY20). Average increase in loose milk price is only slightly comforting, rising at 11 percent over last calendar year. It appears that during 2021, price increase in livestock products has outpaced increase in most other food commodities, except for edible oil and ghee.
Is that worrisome? It depends. According to PBS’ flagship Household Integrated Economic Survey for 2018-19, the combined expenditure on fresh milk, beef and mutton by bottom quintile households (on average) is greater than monthly expenditure on any other food commodity or category. Consider that average bottom quintile household spends 22 percent of its monthly kitchen budget on these three items, compared to 19 percent on wheat flour and bread; 9.2 percent on edible oils & fats; 2.43 percent on all pulses put together; 8.66 percent on vegetables; and just 5.2 percent on refined sugar and gur.
And while price increases in wheat and sugar have admittedly followed abnormal trajectory under the incumbent regime, livestock product price trend had also outpaced rate of food inflation consistently between 2013 and 2018 as well. In fact, although administered prices of controlled commodities such as wheat and sugar have also shown downward (albiet limited) movement over the last decade, livestock product prices have been uniquely un-directional, rising at 11-year CAGR of 9.8 percent for mutton; 9.3 percent for beef; and 7.8 percent for fresh/loose milk. As next electoral cycle is only 18 months away, Pakistan’s recent history shows that food prices receive some reprieve in the months leading up to election as local administrations ramp up effort to reign in prices of kitchen essentials, and provide some relief to general population come election time. Although so far the incumbent regime has done a less than admirable job at bringing food inflation under control, one trend appears more certain than most. Even if prices across various other categories such as cereals and edible oil regain calm, the long-run trend in livestock product prices – milk, beef and mutton – will most likely remain irreversible.
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