Inflation unlikely to be tamed soon: Dr Asim

The inflation is unlikely to be tamed in the coming months following rupee depreciation against dollar and damage to cash crops in Sindh by floods, sources in the Finance Ministry said. Federal Minister Dr Asim Hussain, responding to questions from the National Assembly Standing Committee on Petroleum and Natural Resources, stated that depreciation of rupee against dollar would lead to a rise in the prices of oil and gas and, consequently, electricity.
The issue of inflation, sources said, was also discussed during the last Cabinet meeting with the high-ups of Finance Ministry, maintaining that food inflation would rise, especially the price of tomatoes, potatoes and onions, due to demand-supply gap following massive loss of cash crops in Sindh by flood. The cabinet reportedly also discussed the possibility of importing these items from India but abandoned it idea because of lack of storage capacity and high prices of commodities in India.
An official of Finance Ministry said that depreciation of rupee was a great setback to government efforts to bring down inflation, which would have severe repercussions on economy. The issue of inflation, he claimed, was taken up as agenda item number one during the meetings of Economic Co-ordination Committees (ECC) of the Cabinet.
Inflation in Pakistan is relatively higher than regional average and would further escalate as a result of depreciation of rupee against dollar and damage to crops by flood. A regional comparison shows that year-on-year overall CPI inflation was high in Pakistan compared to other countries and consequently the economic team has been holding regular meetings of the National Price Monitoring Committee to review the situation.
According to CPI data for July presented to the ECC, inflation was 13.8 percent in Pakistan compared to 7.5 percent in Lanka and 6.5 percent in China, while India's last published figure was 9.4 percent for the month of June 2011 and Bangladesh 10.2 percent. The last ECC meeting was reportedly informed that inflationary pressures have escalated over the past few months, driven by a combination of factors: food inflation caused mainly by upward adjustments in energy prices, hike in international commodity prices, increase in freight and transport charges and short term disruptions in the agriculture post-floods supply chain. The feeling within the economic team is that depreciation of rupee would have lethal impact on inflation which would also negatively impact on the cost of doing business in Pakistan.