Haq's Musings

Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Showing posts with label Food Prices. Show all posts

Monday, August 2, 2021

Food Prices in Pakistan Are World's Second Lowest Despite Inflation

The cost of living in Pakistan is the world's lowest despite recent inflationary trends, according to the Cost of Living Index for mid-2021 as published by Numbeo. Numbeo Grocery Index reports that the food prices in Pakistan are the second cheapest in the world. In terms of local purchasing power, Pakistan ranks 101 among 139 nations.

Cost of Living Map. Source: Numbeo

For overall cost of living as measured by Numbeo, Pakistan ranks 139 among 139 countries of the world. It is cheaper to live in Pakistan than to live in any of its neighboring countries in South Asia or West Asia. India ranks 138, Afghanistan 136, Bangladesh 115 and Iran 87.

Local Purchasing Power (LPP) is a measure of relative purchasing power in buying goods and services in a given city for the average net salary in that city. If domestic purchasing power is 40, this means that the inhabitants of that city with an average salary can afford to buy on an average 60% fewer goods and services than New York City residents with an average salary. Pakistan (LPP of 24.56) ranks 101 among 139 countries for Local Purchasing Power. India (42.16) ranks 52, Bangladesh (21.76) 111, Afghanistan (20.53) 112 and Iran (16.82) 124. Switzerland (102.77), the United States (94.32) and Australia (91.07) top the list in terms of local purchasing power.

Cost of Living Rankings. Source: Numbeo

For food prices, Pakistan ranks 138 among 139 countries ranked. Only Afghanistan ranks below Pakistan at 139 on Numbeo Groceries Index. India ranks 129 and Bangladesh 112.

Monthly Cost of Food Per Person in Pakistan. Source: Numbeo

Using a basket of Asian food types, the cost of feeding one person in Pakistan with a healthy, balanced diet of 2400 daily calories works out to Rs. 10,364.55 for a month, much lower than Rs. 13,635.77 (INR 6201.40) in India. It consists of bread, rice, meat, eggs, fruits and vegetables. The most expensive components of the food baskets are chicken and beef. Reducing the amount of meat can help bring the cost of the meal further down. At Rs. 15,248.41 per month, the cost of western food basket is about 50% higher but still significantly lower than Rs. 19,233.35 (INR 8747.13) in India.

Pakistan is among world's top 10 food producing countries. After a wheat and sugarcane shortfall last year, there are reports of record production of wheat and corn in Pakistan this year. Higher domestic production will hopefully help contain food price inflation in coming months.

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Friday, June 4, 2021

Surging Food Prices Push Pakistan Overall Inflation Rate to 10.9% in May 2021

Food prices in Pakistan rose 14.8% in May while the average inflation rate for July-May period of the current fiscal year came in at 8.83%, according to Pakistan Bureau of Statistics. Meanwhile, global food prices have surged by 40% in May, the highest rate in a decade, according to the United Nations Food and Agriculture Organization. Poor harvest due to bad weather and COVID19 pandemic-related disruptions in production and distribution are being blamed.

Global Food Prices Soaring. Source: FAO via Financial Times

In Pakistan, chicken prices shot up by 60%, followed by 55% increase in prices of eggs, 31% rise in prices of mustard oil and wheat prices were up by 30% year over a year, according to the PBS. Globally, prices of cereals (including wheat) jumped 37%, vegetable oil 124%, meat 10% and sugar 57%.

Food Items Seeing Double Digit Price Surges. Source: Bloomberg

Higher imports of food items at high prices and increased shipping costs have added to Pakistan's food inflation woes. Among the factors contributing to elevated food prices are drought in South America and record purchases by China. Cooking oils have soared too on demand for biofuel.

“We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, warned in a phone interview with Bloomberg. “Any of those things could push prices up further than they are now, and then we could start getting worried.”

Developing countries such as Pakistan where an average consumer spends 40% or more on food will be particularly hit by surging food prices. A jump of 37% in cereals is of special concern because people in poor nations get more than 50% of their daily caloric intake from cereals. Early reports indicate that Pakistan is seeing a record production of wheat with an increase of two million tons to 27.3 million tons from 25.3 million tons last year.

Caloric Intake From Cereals. Source: Bloomberg

In West Africa, the prices of staples are up 40% over a five-year average. Countries such as Nigeria, are experiencing food inflation of 23%, the highest level in 15 years, according to the UN World Food Programme. The WFP also warned of vulnerable countries faced with soaring prices, including Lebanon, where food inflation soared to 400% last year on the back of a currency crisis, the pandemic and the after-effects of the Beirut port explosion. Food price inflation in Lebanon is still more than 200%. Countries such as Syria and Sudan are also struggling with food inflation of more than 200 per cent, the WFP said. The impact will be worsening poverty and hunger and slower recovery from the pandemic, according to the Financial Times.

Debt-to-GDP Increase During Pandemic. Source: Business Standard

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