Explosive food inflation.

Food inflation that was already high before the 2022 monsoon floods in Pakistan further accelerated after the floods, particularly in rural areas.

In rural areas food inflation rate crossed 30 per cent in August amidst super floods and remained above that level for the next four months, peaking at 37.9pc in December 2022. In urban areas, people witnessed food inflation rising past 30pc in September, then touching an all-time high of 34.7pc in October before slipping to 29.7pc in November. But in December, urban food inflation again rose to 32.7pc.

Such persistently high rates were primarily the outcome of domestic food shortage that aggravated after the floods, higher food prices in the international market in most of 2022, rupee depreciation, disruptions in domestic supplies and delays in imports due to import restrictions, and the failure of authorities in enforcing administered prices.

The economic slowdown that crept in in the second half of 2022 and is expected to last until the first half of 2023 is making it harder for the government to provide subsidies to the food sector to mitigate the effects of rising food inflation. And people with lost jobs and fast declining real incomes find it too difficult to brave it anymore. But the bad news is that there is little scope for a substantial relief in food prices even in 2023 - not at least during the year's first half.

The floods washed away a large part of minor crops, including vegetables, pulses and oilseed

The country is already facing a wheat crisis. Delays in the decision to import the commodity have already led to several increases in wheat flour, which has made all flour-based products, including naan, roti and bakery bread, costlier. However, officials claim that the wheat crop may not suffer as much as initially thought after the floods as sowing remains in line with the target.

But farmer lobbies say the country may not achieve the production target of 28.4 million tonnes due to various reasons, including a reduction in the area of sowings and growers' inability to take care of the upcoming crop amidst rising costs of energy and fertiliser and other inputs. Prices of fertiliser scaled several new heights in 2022, reflecting the global trend, and it is highly unlikely that these prices will decline substantially in the first two quarters of 2023, even if international prices remain stable.

The reason is the passthrough of global prices of agricultural inputs in our domestic...

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