The South Asian nation is already grappling with dwindling currency reserves and the sharpest inflation in nearly five decades, with a third of the country facing food shortages after torrential rains and destroyed crops.
Eight more districts were added over the weekend to the disaster list of 80 flood-affected areas in the country.
Onions were sold for Rs 50 per kg to Rs 300 ($1.37) before the flood, according to Ali Asghar London, one of thousands living in evacuation tents in Dadu, a town near the west bank of the Indus River. Dadu has seen the most damage to his rice and onion production.
The price of potato has increased four-fold to Rs 100 per kg, tomato has increased by 300% to Rs 400 per kg, while ghee, a fat used for cooking, has increased by 400%, London said last week. . Elsewhere, dairy and meat supplies were also hit as godowns were flooded.
The rise in food prices will add to tensions in an already fragile and politically divided economy, which has been left out of some money after securing a $1.16 billion International Monetary Fund bailout and $9 billion pledge from Qatar, Saudi Arabia and the United Arab Emirates. gaining strength.
The floods, which would have caused an estimated $10 billion in damages, have claimed more than 1,300 lives and forced half a million to live in camps. It has also submerged large tracts of agricultural land and washed away crops in a country where agriculture accounts for about a fifth of the economy.
In Sindh province, the entire cotton crop, spread over 1.5 million acres, as well as 65% of the region’s rice production, has been wiped out, according to Finance Minister Miftah Ismail. The entire production of dates, 20% of sugarcane and half of onion and other vegetable crops have also been destroyed.
Still, Ismail said in an interview on 3 September that vegetable prices are coming down and inflation at a 47-year high is close to its peak and likely average 15% this year. Analysts are not as optimistic.
“The main concern from the floods is the impact on inflation,” said Amrin Soorani, head of research at JS Global Capital. “The last time the food shortage from the 2010 floods nearly doubled food inflation in two months. We are already in an environment of high inflation, making the scenario even more difficult.”
Consumer price gains rose sharply to 27.26 percent in August, rising for the sixth straight month before the full effects of the floods were felt. Food inflation, which accounts for a third of the basket, rose to 29.5% last month. The calculus does not yet include the full effect of a 50% increase in energy prices, a condition of the IMF loan.
Inflation is expected to rise to 30% in the coming two months and the average price gain in this fiscal will be 23%-24%, surpassing the central bank’s estimate of 18%-20%, according to research chief Fahad Rauf. is according to. Ismail Iqbal Securities
Rauf said that with the arrival of imports, the prices of vegetables have started coming down in Karachi. To overcome this shortage, Pakistan is buying onions and tomatoes from Iran and Afghanistan.
Former prime minister Imran Khan, who was ousted in April, is still very popular, running a fierce campaign to press for elections, and devastating floods are fueling public anger.
“It has been four days that our children are sitting on the road waiting for food and shelter. Our children are dying,” said 40-year-old Mohammad Sharif, a protest leader who last week blocked one of the country’s main highways after no relief material was received for a few hours. “We have no food, no tents, nothing.”