The State Bank of Pakistan’s recent warning that domestic food prices may rise more than anticipated in the near term deserves immediate and serious consideration. In its biannual monetary policy report, the central bank has highlighted that food inflation is no longer being driven solely by domestic factors. Increasingly, external shocks are shaping the trajectory of food costs, particularly through energy, fertiliser, and freight charges. The transmission mechanism is clear: disruptions in global energy markets, compounded by regional conflicts and interruptions in gas supplies from the Gulf, are pushing up the cost of fuel and fertiliser. These increases feed directly into cultivation expenses and the transportation of food to markets. By the time these shocks reach consumers, the burden is already beyond the means of many households.
Pakistan’s vulnerability is twofold. On one hand, higher energy and fertiliser costs are inflating domestic production expenses. On the other, a widening food trade deficit is eroding foreign exchange reserves, as weakening agricultural exports reduce the earnings needed to finance an increasingly expensive food import bill. This dual exposure underscores structural weaknesses in the agricultural sector that have persisted for decades.
The country’s irrigation system remains outdated and inefficient, with significant water losses and inadequate storage capacity. Crop choices continue to be concentrated in water‑intensive staples, leaving little room for diversification. Productivity has failed to keep pace with population growth and the volatility of climate change. Smallholder farmers, who form the backbone of rural production, are particularly vulnerable. They lack the financial resilience to absorb sudden increases in fertiliser, fuel, or transport costs. For many, a poor harvest or a spike in input prices quickly translates into debt, perpetuating cycles of poverty.
Climate variability compounds these challenges. The possibility of an El Niño event next year, flagged by the State Bank, adds further uncertainty to the food inflation outlook. With nearly half the population reportedly facing hunger‑like conditions, complacency is not an option. Food inflation is not merely another statistic in the consumer price index; it has direct implications for poverty levels, nutrition, and the development of human capital.
Pakistan cannot control regional wars or dictate global energy prices. What it can do is reduce the extent to which external shocks translate into domestic crises. This requires urgent reforms in agricultural planning, investment in modern irrigation and storage systems, and policies that empower small farmers to withstand volatility. Diversification of crops, better water management, and targeted subsidies for essential inputs could help cushion the impact of global disruptions.
The State Bank has sounded the alarm. It is now up to policymakers to act decisively. Without structural reforms, the next external shock will once again expose the same weaknesses, leaving households to bear the brunt of rising food costs. Ensuring food security is not only an economic imperative but a moral responsibility, and it must be treated with the urgency it demands.
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