Lady luck has a strange romance reserved for PML-N. After two years of record high food inflation - averaging above 25 percent - it seems that the domestic food prices are on the edge of precipice. Although the carryover impact from inflation of past many months means the base is still quite elevated, early signs indicate that domestic commodity prices are ready for a slowdown if not an altogether reversal, and the royal house of Raiwind is all set to take credit.
Of course, all this is not to say that the party in reality has anything to do with the slowdown in prices or has taken any steps to rein in food inflation. It would also be too much of a stretch to claim that the party leadership has a crystal ball or can time the market, considering the colossal error of taking over the government in April 2022 - right at the cusp of the global commodity super cycle. But so far as domestic food commodity markets are concerned, 2024 is increasingly looking like a redox of 2013-14.
In 2013, PML-N returned to power in Punjab and center after five years of food inflation averaging 18 percent per annum. 2024 is only much worse, with food inflation averaging at 21 percent over the last five years. Like 2013, PML-N’s coronation in 2024 has come on the heels of a devastating global commodity super cycle, currency losing at least half of its value, prices of key domestic commodities (not just food items) increasing by at least two times and purchasing power of ordinary Pakistanis being set back by more than one-third, compared to five years ago.
Yet, even before the party in power could usher in any meaningful reforms, lady luck is once again smiling on the members of the royal house, as if the tiff between the lovers is coming to an end. As if the tailwinds from the slowdown in global commodity prices weren’t enough – with WB commodity index declining by one-third from its peak in mid-2022 - the exchange rate has also completed 12 months of much wanted stability.
(In retrospect, that’s all Mr. Dar ever wanted, just enough space (and time) to weather the storm – only that the moment has come nine months too late. Just as he left PTI to deal with the wreckage of his policies in 2018, Mr. Dar probably hosted more than his fair share of criticism in 2023. Maybe that’s the way of the universe. After all, karma isn’t called unsavory names for nothing).
Back to the good tidings for the N-league. The new top czar at the Q-block can sell the agricultural turnaround story in as many presses talks as he wishes; neither he nor anyone else at the hallowed SIFC can name one policy measure responsible for the higher agricultural output in the ongoing fiscal year. Nature gives the devastating flood in September 2022 setting the grounds for extremely lower base. If restoring output to pre-flood levels is the definition of strong growth, may Godkeep this growth anemic in years to come. By the way, when commodity prices finally tumble sooner or later – that other celebrated success, rice exports, will be its first casualty.
And therein lays another rub. The finance minister and friends at SIFC shall soon also find out that when it comes to choosing between agricultural led export growth and domestic price stability, the royal house of Raiwind shall always choose the latter. The telltale signs are already visible in the attempts to fix prices of roti and naan in Punjab, echoing the days of sasti roti from 2010s – or the disinclination to allow sugar exports – ale 2017 crisis, despite screams of surplus due to tepid domestic demand. If there is ever a marketable surplus in any key commodity, the party will use it to depress prices at home and win hearts and minds.
Unfortunately, this isn’t a party of reform, as the N in N-league stands very much for nanny state. The economy is well on its way to missing another opportunity to reform while the public enjoys a short stint of price stability. Enjoy it while it lasts.
Except of course if Iran and Israel escalate their mutual hatred into a full-scale war. But if the world is going to come to an end, who is going to blame the Sharifs anyway.
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