Food prices rise after reduction of monthly rations

The price of some staple food has increased in Iraq after the Ministry of Trade announced last week that several items provided by a monthly food-ration programme would be cancelled. This prompted shopkeepers to raise the cost of items which are being imported at a high price. “Many products offered for years by the monthly food-ration programme have been taken out,” said Omar Abdel Kareem, an economist at Baghdad University. “Consequently, prices have risen”. Some products have seen their prices increase by as much as 300 percent or more. In 2002, lentil beans were sold for about US $0.50 per kilogramme. Since then, the retail price has jumped to around US $2 per kilogramme. According to officials at the trade ministry, which is largely responsible for food distribution, the cut in rations is a direct result of a 25-percent, government-imposed reduction of the annual budget. In an effort to curtail state spending on subsidies and develop a free market economy, the national budget was reduced from US $4 billion to US $3 billion for the current fiscal year. Despite these reductions, scheduled to take effect this month, the trade ministry will continue supplying families with four essential items, including sugar, rice, flour and cooking oil. This is in contrast with 12 items provided during the reign of Saddam Hussein. “If you keep Iraq under socialist laws, the economy won’t improve,” said Ra’ad Hamza, a senior trade ministry official. “But we’ll continue to provide the population with essential items at least until the end of the current year.” While Hamza went on to predict that retail prices on essential foodstuffs could be expected to stabilise again quickly, many local residents who have come to depend on monthly rations expressed desperation. “My family depends on food rations,” said Muhammad Wissam, a Baghdad resident and father of four. “I earn US $50 a month as a painter, but our rent alone is $42.” According to Abdel Kareem, the budget cuts are aggravating an already difficult situation. “Before this decision, prices on items such as vegetables and grains had already doubled in January,” he said. “Since then, they’ve increased more than 20 percent a week.” Families have relied on government-subsidised ration programmes ever since the application of United Nations-imposed sanctions on Iraq in 1991. Nearly 26.5 million of the country’s 28 million people depend on monthly food rations, according to trade ministry figures.