Muslims believe that the Holy Month of Ramadan brings blessings to the people, which is indeed true. However, in Pakistan, unfair business practices make it worse for the people of the lower classes. With the advent of the holy month, the economic behavior of people changes which means they make economic choices by using their psychological observations, more often following their greed. This practice of panic buying leads to increased demand for basic household necessities resulting in demand-pull inflation. Demand-pull inflation occurs when total demand rises while supply either stays the same or declines. The aim of this piece is to highlight the price hikes, unfair business practices, and artificial inflation created by the Mafia during the month of Ramadan and to suggest a possible solution to this problem.
Many Muslim and non-Muslim countries announce different kinds of discounts for the general public, during this holy month. For example, in this context, Australia and the UAE announced incentives for the month before even the moon of the month was sighted. In contrast, the opposite is the case with Pakistan where almost 96% of the population is Muslim, and on account of high inflation such discounts are badly needed but are not provided. This is not something new, prices of everything go up every Ramadan here because of the increased demand, hoarding of basic food items, and artificial shortage in the market. However, the administration fails to tackle this irregularity in the price mechanism due to its ineffective price control policies.
Ramadan is a month of fasting, food intake from “Iftar” to “Suhoor” is higher than usual. People have a different appetite for fruits, in particular, during this month, as it has become a tradition to have fruits on the table for iftar, which causes an increase in demand and prices. Similarly, the consumers purchase more items like meat, fruits, vegetables, beverages, and dairy products which leads to demand-pull inflation and changes the economic structure of expenses. Subsequently, 83% of the households reportedly transform their eating patterns leading to a hike in the expenses for food ranging from 50% to 100% increase. The expenditure of people increases by 80% during this month, and 15% of yearly food spending is thought to go toward Ramadan meals.
In this context, developed countries, such as, Australia has given a 25% discount to its five million Muslim population, and the UAE has given a 75% discount on grocery items for 41 days before the start and till the end of Ramadan. In Pakistan, inflation has already broken 51 years of records by reaching 31.5%. Comparing the inflation rate from January 2023 to the month of March – it has increased by 3.9% and Pakistan is seeing an abnormal increase in inflation this month.
Usually, hoarding or stockpiling is blamed for causing scarcity of products in the actual market. Stockpiling may set off a chain reaction of price increases, for example, the price of wheat will start to rise if several rich people start stockpiling it. It increases the price of food items and decreases the value of money and people’s purchasing power. Such acts in developing countries like Pakistan, where 50% of people’s income is utilized to purchase food items will drive them into poverty. Recent floods have already destroyed crops on a massive scale and livestock by about $3.7 billion, generating food insecurity in the country.
The authorities have not taken any serious notice of the issues such as the improper implementation of price control laws, wrong business practices such as stockpiling and interrupted supply systems, etc. It is the responsibility of the government to tackle such types of artificial shortages and maintain effective price control in the market. As illustrated, that indeed, the economic behavior of people changes during this month, and the administration is already aware that the demand for grocery items rises, so it should design policies accordingly.
However, managing inflation is not a simple task. Numerous variables, including a higher supply of cash and overall demand, are to blame for the price increase. To keep inflation under control, numerous actions can be taken in cooperation between the provincial as well as federal governments and the public.
In Pakistan, the price hike is a recurring issue that has a multifaceted impact on both consumers’ ability to purchase and the nation’s economy as a whole. Inflation has various fundamental reasons. However, they can be dealt with, by combining fiscal and monetary policy actions, as well as increasing crop production and strengthening the economy through private investment. Thus, the government has to build coordination between the federal and provincial levels to design effective price control mechanisms. And the public should boycott certain items for a week or so to bring the prices of the items back to normal. Once in Makkah, the prices of raisins raised, and people came to Hazrat Ali (RA) and complained about it. He suggested they use dates instead of raisins, which will decrease demand and so its price.
In addition, the capacity and capability of district administration should be enhanced to deal with these wrong business practices and artificial price hikes. Governments should provide subsidies during the month on grocery items. People should also not overbuy grocery products. Also, instead of buying spicy sausages (Samosa, Pakora, Kababs), fried dishes, beverages, and juices, people should take plain food which is good for health as well as will not let the prices of necessities surge. Thinking about others is what the Ramadan spirit is about, rich Muslims should give money and basic food items to those with low earning income in such an elegant manner to not harm their self-respect. This way almost every home in the country will have the basics and some luxury that they should be able to afford during Ramadan on their tables.
[Photo by Steve Evans, via Wikimedia Commons]
The views and opinions expressed in this article are those of the author.
Sakina Ahmed Khan is an Assistant Research Fellow at Balochistan Think Tank Network, Quetta.
