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The Case:

Containing inflation is not easy and stabilizing prices of essential food items is even more difficult. In Pakistan, effective monitoring of food prices is nowhere in sight. Repeated warnings by officials against profiteering fall on deaf ears.  When supplies are disrupted, prices move up. Food inflation peaked in FY11 to 18% against aggregate CPI inflation of 13.7% because in that year, super floods had washed away pulses, vegetables and other minor food crops and wrecked farm to market transportation. Sowings and harvests of wheat, rice, maize and sugarcane were also hit. The very next year, food inflation equaled overall inflation of 11% as supplies had improved after increase in crop harvests and improvement in logistics. In the last fiscal year too, food inflation of 7.4% was slightly higher than the general inflation of 7.1%. But in six months of the current fiscal year, increase in food prices has been higher than increase in CPI inflation as a whole, 9.9% against 8.9%. According to latest inflation report of State Bank of Pakistan (SBP), prices of 17 out of 20 food items went up in December with year-on-year increase ranging between 2% in case of sugar, to 78% in case of onions. Reports of previous five months had painted almost identical picture of prices of essential food items. According to Pakistan Bureau of Statistics (PBS), food inflation in small towns and villages rise faster than in major cities, it essentially means supplies are really scant. It also means that in the given period, cost of transportation of some food items from cities to rural areas has been higher than intra-city transportation cost. There is even huge difference in the prices of rice, wheat flour, sugar, pulses, fish, eggs and poultry meat in various parts of the country. Retail food prices also vary among various cities and even between different markets of the same city. Some food items like vegetables, fruits and pulses show erratic changes in prices also because they are perishable. Not only Pakistan, but other countries in the region like IndiaChinaBangladesh and Sri Lanka have lately experienced abnormal rise in prices of onions and potatoes simply because a late or faulty assessment of crop shortage made it difficult for them to compensate supply gaps with imports.



Being a student of Economics, carefully analyze the above case and think over the factors that cause a huge difference in the prices of food items in various parts of the country. What measures should be taken in order to control the food inflation as a whole? Discuss logically.

Important Note:

For better understanding of the case, read this article thoroughly.


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Replies to This Discussion

no problem Gh... im thinking on solutions ...inshaaAllah u will get the best one... dont worry.

n glad to know ur writing in ur own words....keep it up...

well its better to be not discuss the copy paste issue anymore. hopefully all of you are now familiar with the copy past issue that, it is must to mention the author or writer name  etc etc. or if you are going to paste ur own words so write like this... in my opinion..... 

so now just focus on the que of GDB ...


plz koi bata sakta hy is me kya kya add kr sakty hain.kuch samjh nahi arahe...

Plz don't quarrel , we should focus on topic and try to solve the problem.

factors that cause differences in prices of food:

1. Cost of production

2. landed cost of imported items

3. transportation cost

4.size of population

5. size of market

6. degree of administrative control.

Size of Population aur Size of population kesy effect kery g?


inflation required two conditions 1. more demand 2. less supply

greater size of population =>more demand=> inflation

small the size of market => rare supply=> inflation

Isko me ne likh toh toh dia "Size of population ko mention kiye bina


furquan ur absolutely right ya lamby lamby articles mat post kar.....theak jo solution usay post karo....like furan bai

Price controls are governmental restrictions on the prices that can be charged for goods and services in a  marker. The intent behind implementing such controls can stem from the desire to maintain affordability of staple foods and goods, to prevent price gouging during shortages, and to slow inflation, or, alternatively, to insure a minimum income for providers of certain goods or a minimum wage. There are two primary forms of price control, a price ceiling, the maximum price that can be charged, and a price floor, the minimum price that can be charged.

Historically, price controls have often been imposed as part of a larger income policy package also employing wage controls and other regulatory elements.

Although price controls are sometimes used by governments, economists usually agree that price controls don't accomplish what they are intended to do and are generally to be avoided

The primary criticism leveled against price controls is that by keeping prices artificially low, demand is increased to the point where supply can not keep up, leading to shortages in the price-controlled product.

Inflation is a hydra header monster. It cannot be controlled by taking a single measure. However, if monetary and fiscal measures are wisely coordinated, it can greatly help in controlling the continuous process of rising prices. The main anti inflationary measures both short and long terms are:Containing money supply;The monetary supply should be kept within reasonable limits.

Reducing budgetary deficit;The budgetary deficit should be kept low level. The deficit should be met by disciplined policy of demand management.Emphasis on commodity producing sectors:The government should give special attention to the production of cottons, wheat, vegetables, edible oil etc. it will have soothing effects on inflating.

Commodity balance:The government should have a strict watch on the prices of essential commodities in the country. It should take immediate steps in changing the import and export duties and maintain the availability of goods is reasonable prices.Curtailment of administrative expenses:The curtailment of administrative expenses can have a softening effect on inflation.Closing of the utility stores;The net work of over 700 utility stores has not helped in stabilizing the prices in the country. These are mostly located in big cities and posh localities. The low income groups are least benefiting from them. The earlier they are closed, the better it is.

inflation is the rise in price levels in an economy over a given time period. This means that a given amount of currency will buy a lower number of goods as time passes as it loses its value. For this reason controlling inflation is one of the main economic objectives of a government. There are many ways to control inflation; however most of them work by either increasing aggregate supply or decreasing aggregate demand. Both actions result in the equilibrium moving down. The measures that are required to control the inflation depend on what is thought to be causing it. A government's monetary policy can decrease aggregate demand by increasing interest rates. This will discourage borrowing and increase savings, both of which constrict consumption, thereby decreasing aggregate demandFiscal policies can also be used to control inflation. If a government wants to decrease it then it will increase taxation and decrease government spending. This will result in consumers and firms having less to spend, therefore coupled with the lower government spending this will cause leakages to increase and injections to decrease, reducing aggregate demand. Subsiding the costs of firms will decrease production cost allowing them to lower their prices, also reducing inflation. Supply side policies such as education and training will increase the quality and quantity of labor available for firms, which will result in an outward shift of the aggregate supply curve. This will move the equilibrium down, decreasing price levels and therefore also decreasing inflation. Other ways to decrease inflation is to reduce tariffs on imports, as this will lead to lower prices and therefore lower cost-push inflation. Inflation targeting can lower the chances of both types of inflation by decreasing the expectations of inflation. In conclusion short term measures to control inflation seek to decrease aggregate demand, whereas long term solutions want to increase aggregate supply.

searched result... extract the required lines and material......



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