LAHORE, Dec 16: Retail price of flour hit Rs225 per 20kg on Tuesday, the highest-ever in the province, in wake of government decision to increase release price twice last week.

The Pakistan Flour Mills Association (PFMA), on its part, accused the retailers and traders of increasing price on market fears and exploiting both the millers and consumers.

The Punjab government increased wheat release price twice last week — Rs5 per 40 kg each time — from Rs330 per 40kg to Rs335 on 9th and then to Rs340 on 11th. But it allowed only one time increase to the millers and asked them to absorb the second increase on the grounds that they already had liberal profit margins. The millers, however, sought corresponding increase to adjust price.

During a war of words between the government and the millers, the retailers raised the price to the expected level after the second increase in wheat release price.

According to the millers, the government, on its part, seems to be more concerned with its scheme of targeted subsidy to the poorest of the poor segment of the society. It is launching a scheme of subsidised flour from the 25th at a cost of Rs20 million per month. Under the scheme, it would provide 350,000 families 40kg of flour at a subsidised price, with each bag 60 rupees cheaper than the ex-mill rate.

The government wanted to negotiate price for the scheme with the millers and sale points from where the mills would deliver flour whereas the millers wanted to re-negotiate the price absorbing the second increase.

But the consumers, Dawn spoke to on Tuesday, lamented the fact that they were already caught in a vicious circle of price hike competition between the millers and the Punjab government.

“The government unilaterally increases the price and assures the public that official price would not increase. But the market immediately responds to fears and speculations. Then the government and millers take the plea that since flour price has already increased in the open market, there is no harm in officially certifying the increase. The official certification causes further hike in price,” said a consumer.

“This phenomenon has been there for the last four months, increasing the price of 20kg bag by Rs50. This is being done by a government headed by a flour miller,” said a retailer.