Ramadan calls for Muslims to practise self-discipline and sacrifice, as well as to show compassion to the poor and less fortunate through fasting. Some may not realise that besides health and spiritual benefits, Ramadan also comes with economic benefits.
Ramadan is the only month in the Islamic calendar that observes two out of five pillars of Islam, which are Zakat al-Fitr and fasting. Zakat is a form of compulsory almsgiving or "tax" in Islam. In contrast to sadaqah or act of giving voluntarily, Zakat al-Fitr is a charity taken for the poor and it is obliged upon Muslims to pay by the end of Ramadan.
Ramadan is considered a blessed month during which rewards for good deeds and generosity are multiplied. The Prophet (SAW) was the most generous of all the people and he was more generous in Ramadan.
Thus, Prime Minister Tan Sri Muhyiddin Yassin's launch of the National Waqaf Month, in conjunction with the holy month, fits perfectly with Islamic values that encourage acts of charity and generosity during Ramadan.
Fasting is also associated with lower consumption of food. But how does it relate to the increase in food prices, when higher demand may have caused the prices to increase? Does it mean that Muslims actually demand more food during Ramadan?
The topic of the rise in food prices during Ramadan has been highlighted for the past five years and may resurface next year. Based on past reports, some of the reasons include rising input costs, lack of supply, price manipulation by suppliers and high demand from customers.
Let us have a look at Muslims' consumption pattern during Ramadan. A Google analysis on searches on social media and a survey among 1,500 people in a Muslim-majority country revealed that food was the main theme during Ramadan.
While women's interest in food increased by 44 per cent and the focus was on desserts and recipes, men's interest in food grew by 70 per cent and the focus was on barbeque and entertainment.
Ironically, food has been more commercialised during Ramadan than any other months. Food advertisements were massive and came with specific promotions and offers. Many restaurants and cafes operate with extended hours for Suhoor.
It was reported that 83 per cent of families changed their food consumption habits during Ramadan. Food bills shot up by 50 to 100 per cent and food consumption in Ramadan accounts for 15pc of annual food expenditure.
Food consumption has reached a point where there is enormous generation of food waste. It was reported that there was an increase of 40 tonnes of waste collected in the first 10 days of Ramadan. During Ramadan, 20,088 tonnes of food is wasted daily, which is enough to feed 1½ times the Malaysian population.
Spending levels surged dramatically as Muslims shop for food, gifts and Eid clothing. Ramadan spending is estimated to be worth more than £200 million to the United Kingdom economy and billions across the Muslim world.
The significance of Ramadan has also been studied in the stock market. A stock analysis based on 15 countries in 1989 to 2007 found that on average, stock returns are nine times higher than other times of year due to the "Ramadan Effect". In a later study in 2016, however, found a mix of positive and negative results within three distinct Muslim-majority country groups.
To conclude, Ramadan has a significant impact on the economy. Despite the fact that Ramadan is a fasting month, there is a massive amount of food waste. It is no coincidence that the increase in food prices and high demand of food occurred in tandem during Ramadan.
Food businesses may take advantage by exploiting the supply and increase the food prices. The lesson here is to identify a strategy to efficiently manage the food inventory and maintain price stability.
On the other hand, Muslims are also giving to charity as much as possible during Ramadan. The World Bank has estimated that global Zakat funds reach US$600 billion each year and 85 per cent is collected during Ramadan. This "Zakat liquidity" is crucial in times of economic difficulty and this billion-dollar stimulus Zakat package can be distributed globally to achieve Sustainable Development Goal 1 — no poverty.
Ramadan proves that religion goes hand in hand with economy. Muslims should take advantage of this by developing an ethical and sustainable economy.
The writer is fellow, Centre for Economics and Social Studies, Institute of Islamic Understanding Malaysia (IKIM)