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Consequences of price controls

Islamabad: As elections approach, the issue of inflation and price control policies has hit the headlines – albeit for all the wrong reasons. The federal government’s 2021 price control order, like similar policies in other developing countries, was apparently intended to benefit consumers hit by inflation, but instead created market distortions and incurred heavy costs. Not only did producers allocate resources inefficiently, but they also began lobbying with political forces to influence price-setting decisions. In retrospect, we see inflation running at around 20% (from 2021) after the 2021 price control order, while the average CPI for other South Asian countries