Vulnerability Analysis and Mapping (VAM) Unit-World Food Programme (WFP)-Pakistan
Market price bulletin is a monthly publication of the United Nations World Food Programme Pakistan. With the aim to detect price deviations and its impact on the purchasing power of the vulnerable households, WFP through its VAM
Unit regularly monitors food prices and wage rates in the country.
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General inflation, based on Consumer Price Index (CPI), increased from 10.1 percent in January to 11 percent in February 2012.
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Despite increase in Estimated Global wheat production by 2.1 MMT, global wheat price increased slightly in February 2012.
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Domestic wheat production in 2011/12 is estimated to be the same as last year.
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Rice supply remained good while the prices remained stable.
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Prices of petroleum products are expected to increase further.
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Energy problems along-with increase in prices of agricultural inputs are the major factors causing food inflation.
Inflation Watch
General inflation, based on Consumer Price Index
(CPI), increased in February 2012 by 11 percent against the same period last year. Similarly, in
February 2012, the CPI of Food and Non-alcoholic beverages increased by 10.58 percent against the same period last year 1 .
CPI of some of the top daily use food commodities revealed that several food items registered an increase while others decreased against last month. Notable increases were in chicken (3.32%), fish (2.75%), beans (2.44%), and cereals (1.37%) while those registering decrease were eggs (12.23%), fresh vegetables
(9.56%), sugar (3.72%), and Moong (2.69%).
Similarly, price of top daily use food commodities compared to same period previous year
(February 2011) revealed an increase in eggs (by
39.02%), onions (37.74%), gram whole
(23.18%), and chicken (19.98%) while those registering decrease were sugar (24.81%), main pulses (from 1.77% to 12.21%), and potatoes
(3.08%).
Pakistan Bureau of Statistics, Pakistan.
Global wheat Price increased slightly in
February 2012
For the month of February 2012, the global wheat supplies for 2011/12 are projected at 2.1 million tons higher than January 2012. The projected increase is due to larger initial stocks in
Kazakhstan and increased production in India,
Kazakhstan, and Morocco. In Kazakhstan, the initial stocks were raised by 0.6 million tons due to reduced domestic consumption during
2010/11. India’s production for 2011/12 increased by 0.9 million tons, as per latest government revisions, due to increase in yield from the crop harvested last spring. Kazakhstan’s production was also up by 0.2 million tons based on the recent official estimate. Production in
Morocco was up by 0.2 million tons also based on official revisions of estimated yields from the crop harvested several months ago.
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Notwithstanding the increased production, the global wheat price experienced a slight surge during February 2012. On a month-on-month basis, wheat price in USA increased by 4 percent and in India by 6 percent whereas in Afghanistan
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World Agricultural Supply and Demand Estimates (February 2012)
1 Market Price Bulletin-February 2012

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450
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Vulnerability Analysis and Mapping (VAM) Unit-World Food Programme (WFP)-Pakistan it decreased by 2 percent. The reason for price fluctuation in India and Afghanistan is mainly attributed to increase or decrease in the US dollar value against the local currency
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. Based on the latest estimates, wheat supply for India increased while in-country wheat price remained almost unchanged in February 2012. Similarly, in
Afghanistan in-country wheat price remained stable during February 2012.
Figure-1: Global Wheat Prices Soft
White (FOB) 2011-2012
35
30
25
20
15
10
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0 year’s production of 23.9 MMT. Domestic wheat and wheat flour prices started moving up after the government announced its new wheat support price I November 2011.
In February 2012, the domestic wheat price saw no significant increase on a month-on-month basis; however, it was 6 percent higher than
September 2011. Since the fresh harvest of
sold at the new support price of
Rs.1050 (per 40 kg) the price of wheat is expected to increase by Rs. 2 to 3 per kg in April
2012. Similarly, the wheat flour price in January
2012 remained the same with only nominal increase. The average retail price of wheat flour in the major cities of Pakistan 4 increased from
Rs.31.30/kg to Rs.31.35/kg. Comparing wheat flour price to the pre-flood price of June 2011, there was an increase of 5 percent in February
2012.
Figure-2: Domestic Wheat and Wheat
Flour Prices (Jan 11-Feb 2012)
AUSTRAILIA
Pakistan
USA
India
Afghanistan
Compared to the global wheat price, in-country wheat price in Pakistan remained 17 percent higher than the wheat price in USA in February
2012. Compared to regional wheat prices, domestic wheat price remained 2 percent lower than in India and 24 percent lower than
Afghanistan. In view of the higher production and favorable weather conditions in the major wheat producing countries of the world, the global wheat price is expected to remain stable.
Good domestic wheat production in 2011/12
The price of wheat and wheat flour remained stable in 2011 mainly due to the bumper harvest of last year (2010-2011) despite the devastating floods for two consecutive years. Projected domestic wheat production for the year 2011/12
(May 2011 to April 2011) is forecast at 24 million metric tons (MMT), which is a bit higher than last
3
Global Prices are based on UN Standard Exchange Rate
Wheat Wheat flour
The expected increase in wheat flour price, in view of the increased wheat support price in
April-May 2012 would further diminish the purchasing power of the vulnerable households leading to more food insecurity.
Rice supply remained fairly comfortable while price remained stable
4 Lahore, Multan, Karachi, Peshawar and Quetta
2 Market Price Bulletin-February 2012

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40
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Vulnerability Analysis and Mapping (VAM) Unit-World Food Programme (WFP)-Pakistan
Estimates of 2011 crops in Pakistan, where the harvest was completed in October 2011, have been raised by 1 million tons. The revision follows the release of official assessments indicating that the area planted with paddy rebounded by
730,000 hectares over the season to 3.1 million hectares. Ample availability of water for irrigation and overall favourable growing conditions were important factors that contributed to the increased production estimates for 2011. Hence due to increase in cultivated areas by 1 million hectares, the production estimate was revised to
10.8 million tons.
Despite the outstanding revival, the season was not without setbacks, as floods affected around
93,000 hectares of plantings, mainly in Sindh. A considerable increase in prices of basic inputs was also registered, particularly in the case of fertilizers, where the production was reported to have been affected by electrical power shortages 5 . On the other hand the prices of most commonly used types of rice i.e., Irri and Basmati have remained almost unchanged since
November 2011. However, there are some interprovincial disparities; for instance, the highest price for Irri-Rice was observed in Karachi at
Rs.55.6 per kg whereas the lowest in Lahore was at Rs.37 per kg in the month of February 2012.
Prices of petroleum products are expected to increase further
Prices of petroleum products remained
Figure-3: Fuel Prices (2010-2012) unchanged during February 2012, however, the government has hinted towards increasing the price of petroleum products by early March 2012.
There was an increase of 5 percent in the price of petroleum products in the month of January 2012 as well. So far the Government attributed these price hikes to global price increases and the political turmoil in the Middle East as well as other oil producing countries.
In February the Government also announced an increase of Rs.1.06 per kg in the price of
Compressed Natural Gas (CNG). The CNG is the main source of fuel for the motor-vehicle in the country and this increase is directly impacting the means of transportation for low-income population.
Agricultural input prices soared to their highest level in 2012
The price of the agricultural inputs increased significantly during the second half of 2011, which also contributed to the rise in the prices of food commodities. Furthermore, the increased production costs due to increase in energy costs will push the food commodity prices up. The price of fertilizer (Urea) has also increased significantly since February 2011. The price of urea sharply increased during the late 2011 and early 2012 with the result that in February 2012 the price of urea registered an increase of 62 percent yearon-year basis. Compared to December 2011, the
Figure-4: Fertilizers Prices (2011-
2012)
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1000
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200
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Super-Petrol
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FAO Rice Market Monitor – January 2012
HSD
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Urea Sona Urea Kissan
Market Price Bulletin-February 2012

Vulnerability Analysis and Mapping (VAM) Unit-World Food Programme (WFP)-Pakistan price of urea surged by 3 percent in February
2012.
Consumer purchasing power remained almost stagnant during February 2012
The wage rate for unskilled labourers involved in casual labour is monitored to understand the purchasing power of the vulnerable households to buy food commodities. The average wage rate of rate may experience any increase. The historical price trend of the wheat flour suggests that in the coming days the purchasing power of the vulnerable household would further deteriorate, which may jeopardize their food security.
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Figure-5: Terms of Trade (TOT) for wheat flour (2010-2012) daily unskilled labour remained almost unchanged in the month of February 2012 in major cities of the country
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, with a nominal increase to Rs 395 compared to Rs. 390 in the previous month.
Looking at the terms of trade (ToT) between wheat flour and daily wage of an unskilled laborer
(meaning how many kilograms of wheat flour one can buy with wage earned in a day), it was observed that the purchasing power of a daily wager has slightly increased in February due to the nominal increase in the wage rate and a stable wheat flour price. In February, the ToT for wheat flour has thus increased from 12.44 kg to
12.62 kg (Figure 5). The demand for the unskilled labour is expected to increase in view of the coming harvesting season, however, based on past wage rate data it is unlikely that the wage
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Lahore, Multan, Karachi, Peshawar and Quetta
4 Market Price Bulletin-February 2012

Vulnerability Analysis and Mapping (VAM) Unit-World Food Programme (WFP)-Pakistan
Major
Commodities
City
Wheat kg Lahore
Multan
Karachi
Peshawar
Quetta
Wheat flour av.
Qlt. Kg
Rice irri-6 kg
Rice basmati broken kg
Sugar kg
Veg. Ghee (tin) kg
Cooking oil (tin) ltr
Gram pulse kg
Karachi
Peshawar
Quetta
Lahore
Multan
Karachi
Peshawar
Quetta
Lahore
Multan
Karachi
Peshawar
Chicken kg
Quetta
Lahore
Multan
Karachi
Peshawar
Quetta
▲ = Price increase over previous period
▼ = Price decrease over previous period
► =No price change
Lahore
Multan
Karachi
Peshawar
Quetta
Lahore
Multan
Karachi
Peshawar
Quetta
Lahore
Multan
Karachi
Peshawar
Quetta
Lahore
Multan
Karachi
Peshawar
Quetta
Lahore
Multan
Current Prices
(Feb 2012) / KG
PKR
27.938
25.988
28.75
28.792
30
198
198
198
198
198
198
198
198
72.26
75.38
74.12
78.25
70.75
141.61
153.75
177
166.25
181.25
61
61.54
66.62
59
50.84
48.75
50.62
50.67
50.25
198
198
30
29.5
34
30.5
32.5
55.64
37
48.62
47
40
60.29
USD
0.32
0.29
0.32
0.32
0.34
2.23
2.23
2.23
2.23
2.23
2.23
2.23
2.23
0.82
0.85
0.84
0.88
0.80
1.60
1.74
2.00
1.88
2.05
0.69
0.69
0.75
0.67
0.57
0.55
0.57
0.57
0.57
2.23
2.23
0.34
0.33
0.38
0.34
0.37
0.63
0.42
0.55
0.53
0.45
0.68
% Change (Feb 12) Over Change Direction (Feb 12) over
Jan-12
1.02%
-1.24%
0.88%
-0.72%
0.00%
Feb-11
3.24%
-0.28%
4.55%
1.92%
-3.23%
Feb-10
1.81%
-1.00%
8.98%
8.65%
6.65%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
10.20%
4.87%
3.61%
4.79%
8.85%
-1.56%
-1.60%
1.14%
-2.06%
9.02%
0.00%
-1.67%
0.00%
0.83%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.28%
-1.04%
5.10%
0.99%
5.25%
35.71%
-6.33%
18.24%
0.00%
5.26%
22.52%
2.39%
1.13%
6.25%
3.46%
5.69%
50.66%
15.63%
44.92%
6.92%
17.65%
48.61%
0.00%
3.62%
0.44%
0.00%
13.21%
25.80%
26.90%
-4.07%
35.56%
42.22%
27.38%
18.00%
-2.10% -24.46% -25.92%
-3.47% -24.86% -26.97%
-2.09% -22.94% -25.56%
-4.85% -25.99% -26.12%
-2.90% -24.44% -26.10%
0.00% 3.13% 40.23%
0.00% 4.49% 40.23%
4.49%
4.49%
3.13%
3.13%
4.49%
4.49%
4.49%
3.13%
4.03%
2.91%
4.88%
-0.58%
-9.87%
18.18%
14.63%
20.20%
15.85%
17.89%
40.23%
40.23%
40.23%
40.23%
40.23%
40.23%
40.23%
40.23%
33.72%
37.25%
29.33%
35.36%
21.98%
31.42%
30.57%
16.07%
24.92%
37.31%
Jan-12 Feb-11 Feb-10
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5 Market Price Bulletin-February 2012