Ending market distortions to ease inflation: CCP study

ISLAMABAD: A draft study by the Competition Commission of Pakistan (CCP) has found that a major part of inflation faced by an average household was due to the distortions in the market mechanism of only 10 food items.

The study aimed at addressing market distortions and promoting efficiency and competition in the value chain has been conducted for onions, edible oil and ghee, potatoes, poultry, wheat, sugar, milk, rice, tomatoes, and gram and pulses.

These commodities constitute 63 per cent of an average household’s monthly expenditure on food items.

The 10 commodities recorded a combined 35pc increase in prices in July as compared to July 2021, the study noted.

Average household monthly spends 63pc on 10 food items

The highest increase of 92pc was noted in the price of dal masoor followed by 89pc in onion, 77pc in edible oil and 52pc in gram and pulses during the same period.

The study has identified the causes of price hikes and supply chain issues in these items including inappropriate policies and regulations distorting the markets, inhibiting competition and discouraging private investment due to policy issues.

“Besides the least efforts to promote research, innovation and technology utilisation to enhance crop yield and productivity,” the study observed.

The CCP has recommended the government shift its policy focus from the current major crops of sugar and wheat to equally significant other crops having export potentials such as pulses, other cereals, oil seeds, and vegetables.

It has been highlighted that the issue of low agricultural yield has to be addressed and various measures have been suggested to address inefficiencies in the farm sector.

The double-digit inflation in Pakistan since November 2021 prompted the Economic Coordination Committee of the Cabinet to capture the food inflation and the CCP was tasked by the National Price Monitoring Committee (NPMC) to look into the reasons for the price increase in essential commodities.

The study has suggested the establishment of Strategic Grain Reserves (SGRs) to avert the crisis of food security and price volatility amid the flood situation.

The CCP shortlisted 10 major food items from the list of 51 essential commodities in the Sensitive Price Index for the study.

CCP chairperson Rahat Kaunain Hassan, Member Mujtaba Ahmed Lodhi, and other senior officers have shared the draft study and held consultative sessions with the stakeholders including representatives from the agriculture and food ministries, research institutes, and other related departments from Punjab, Sindh, and Khyber Pakhtunkhwa.

The meetings with representatives from Balochistan will be held next month.