Agreement Among Sellers to Raise Prices

Authored by Dr. Muhammad Zia-ur-Rahman Azmi (رحمه الله)

Scenario of Sellers Increasing Prices Due to Self-Interest:​

If sellers, such as traders, agree among themselves to raise the prices of goods out of selfish motives, Islamic teachings permit the authority (حاکم) to intervene and set fair prices.

Permissibility of Price Regulation in Specific Cases:​

1. When Sellers Manipulate Prices:
   
   • If the price increase is due to deliberate manipulation or collusion among traders to exploit consumers, it becomes the authority’s duty to:
     • Establish just pricing to ensure fairness between buyers and sellers.
     • Act according to the general principle of securing benefit and preventing harm (جلب المنفعة ودفع المفسدة).
2. When Prices Rise Due to Supply and Demand:
   
   • If prices increase naturally due to factors such as:
     
     • Scarcity of supply.
     • High demand without intentional manipulation.
   • In this case, the authority should not intervene to regulate prices.
   • The Prophet Muhammad (ﷺ) highlighted this principle, emphasizing reliance on Allah’s decree in such situations.

Prophetic Guidance on Price Setting:​

1. Hadith of Anas (رضي الله عنه):
   Anas reported that prices rose during the time of the Prophet (ﷺ), and people requested him to set prices. He replied:
   
   "Indeed, Allah is the one who sets prices, grants provision, and constrains provision. I wish to meet Allah without anyone claiming that I committed injustice against them in matters of wealth or blood."
   (Sunan Abi Dawood, Hadith No. 3451; Sunan al-Tirmidhi, Hadith No. 1314; Sunan Ibn Majah, Hadith No. 2200)
2. Hadith of Abu Hurairah (رضي الله عنه):
   A man requested the Prophet (ﷺ) to fix prices, but the Prophet replied:
   
   "Rather, supplicate to Allah."
   Another man made the same request, and the Prophet (ﷺ) said:
   "Allah is the one who decreases and increases (prices)."
   (Sunan Abi Dawood, Hadith No. 3450)

Key Principles Derived from These Teachings:​

1. Price Setting Is Permissible When:
   
   • There is manipulation or collusion by sellers to artificially raise prices.
2. Price Setting Is Not Permissible When:
   
   • The increase in prices is due to natural market factors, such as supply shortages or increased demand.
3. Sellers’ Ethical Obligation:
   
   • Traders should avoid exploiting market conditions for undue profits.
   • Raising prices beyond the prevailing market rates due to manipulation is impermissible in Islam.
4. Reliance on Allah’s Decree:
   
   • Price fluctuations, when natural, are part of Allah’s distribution of sustenance among His creation, and human intervention in such cases is discouraged.

Conclusion:​

Islamic guidelines for trade emphasize fairness and honesty. Authorities may intervene to regulate prices only when there is clear exploitation. Otherwise, natural market dynamics should be left undisturbed, trusting Allah as the ultimate provider and regulator of sustenance.

—Referenced from the Permanent Committee for Islamic Research and Ifta (Al-Lajnah Ad-Daimah), Fatwa No. 6374.