Wednesday, January 9, 2008

Warning signs

Much more than the assassination of Benazir Bhutto or the threats from presidential candidates this news should (and probably will) really scare those ruling Pakistan:

There have been queues outside Pakistani shops in towns around the country, and flour prices have shot up.

Wheat flour is a staple foodstuff in Pakistan, where rotis or unleavened bread are eaten with almost every meal.

Last week Afghanistan appealed for foreign help to combat a wheat shortage while Bangladesh recently warned it faced a crisis over rice supplies.
Inflation had been taking a bite out of people's earnings in 2006 but had eased in the first quarters of 2007 which seemed to have brought the government some breathing space, however inflation in basic necessities has sharply increased in the last quarter. FromThe Nation:
The official statistics showed that the Sensitive Price Indicator (SPI) for the income group of Rs 3000 per month [the lowest income group] soared by 15.72 per cent on January 3 as compared to the corresponding period of the last financial year.
This is not sustainable. While the crisis seems to be due to a drought in Australia the people will blame the Musharraf government which is already struggling with the effect of higher fuel prices and a downturn in Foreign Direct Investment.

The State Bank of Pakistan has issued a decidedly somber forecast for 2008. Looks like turbulent times ahead.

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