Retail prices still up

The fact that wholesale prices have recently dropped to somewhere near their seasonal averages indicates that the problem does not lie in that sector of the market. Retailers complain that their prices reflect the fact that they have to bear costs such as transportation and rent, but this is unpersuasive as these costs must be borne by them at all other times too. If wholesale prices drop there is no reason that retail prices should not follow suit, the self-serving justifications of retail traders notwithstanding.

Indeed the suspicion was always that the sudden spiralling of prices had more to do with market manipulation and profit maximization than with the simple laws of supply and demand. With the present anomaly between wholesale and retail prices this seems even more apparent.

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Nor does the government's role in this debacle fill us with any confidence. The commerce ministry's pronouncements on the matter have been contradictory at best and incoherent at worst.

Only last week the commerce minister visited a couple of kitchen markets before declaring that prices were normal for Ramadan. To top it off, he blamed the media for exaggerating the situation.

Earlier, of course, he had suggested that there was little the government could actually do to control prices which merely reflected supply and demand in the market, and earlier still he had complained that the price spiral was partly due to the finance ministry's refusal to lower the duty on imported items.

Last week we wrote that we were waiting for a coherent official policy statement on the matter. We are still waiting.