-Editorial

WEB DESK: It is good to see that the government is monitoring the price situation in the country closely with a view to taking timely steps to contain inflationary trends in the economy.

In the latest National Price Monitoring Committee (NPMC) meeting held recently, Finance Minister Ishaq Dar who was in the chair showed concern at the increasing trend in the price of milk powder and advised CCP to look into the matter to eliminate the undue profit margin. CCP was also instructed to examine the increasing meat prices and bring up the findings in the next meeting in order to enable the government to take corrective measures.

Besides, Ishaq Dar ordered identification of causes behind increasing prices of essential food items. Chairman CCP, Vadiyya Khalil, informed the Finance Minister that CCP was conducting a study on meat sector which will soon be released for public comments.

She also stated that similar instructions were also given to the CCP last year and its proposals were: devising and implementing a uniform price formula by all provinces; mapping of commodities' supply in the country; establishment of agricultural supermarkets for farmers; setting up of a monitoring commission to decide on timely import and export of food commodities; maintaining a buffer stock to counter supply shortages and establishing cool chains for perishable commodities. The Finance Minister appreciated the proposals of CCP and asked the relevant ministries and departments to co-ordinate with CCP regarding implementation of these proposals.

It may be mentioned that stability in prices has usually been a major objective of various governments. In order to achieve this objective, NPMC was constituted in January, 2011 under the chairmanship of Secretary, Finance Division and mandated to assess the demand and supply of key commodities and take or propose corrective measures as necessary.

The committee meets regularly to review price-supply situation, especially in relation to essential items. The importance accorded to price stability by the present government is evident from the fact that NPMC is now chaired by a Federal Minister of Finance. Provincial governments also monitor prices and supply of essential items and District Price Control Committees have been formed to check prices in their areas. Sasta Bazaars for consumers have also been established to provide essential food items at reasonable rates.

Besides, CCP is actively working to control hoarding, profiteering and breaking cartelization to protect consumers from anti-competitive practices. CCP has in the past taken action against several cartels including Pakistan Sugar Mills Association, Pakistan Poultry Association and Pakistan Vanaspati Manufacturers Association.

However, while appreciating the concerns of the government about increase in prices of selected items, it needs to be highlighted that the above actions of the government could only yield limited and short-term results. For instance, timely import or export of commodities, establishment of supermarkets for farmers and a uniform price formula for all provinces could only stabilise the prices of certain commodities and for a certain period if fundamental factors to control the prices are not properly addressed. Price level and its trend is basically determined by supply-demand conditions in the country, adjustment in the exchange rate of its currency, the behaviour of global prices in international market, tariff rates, etc.

It seems that such factors which are highly important in this connection are not even considered by the NPMC properly. Proposals given by the CCP could, therefore, only provide temporary relief and that too at a cost in some other areas of economy.

It may also be mentioned that CCP could be very useful in breaking monopolies and fostering competition but does not have the needed capacity to analyse the price trends thoroughly and analytically. In our view, it would be better for the government to let the CCP concentrate on its own task and assign the job of monitoring the prices and suggesting ways to contain the price pressures in the economy to another department or institution which has the necessary expertise in the field.

Source: Business Recorder