LAHORE: The Pakistan Industrial and Traders Associations Front (PIAF) has asked the government to withdraw the anti-industry decision, warning the authorities that inflation above six percent could hurt the economic growth and only a prudent approach could keep it in under the control.
PIAF Chairman Mian Nauman Kabir in a statement on Saturday said that more than 65 percent record jump in fuel prices have pushed up the weekly inflation. The oil prices and inflation are closely connected in a cause-and-effect relationship. As fuel rates move up, inflation, which is the measure of general price trends throughout the economy, follows in the same direction upward. On the other hand, if the rates of fuel fall, inflationary pressures start to drop, he said.
In the start of this year, oil prices collapsed amid the Covid-19 pandemic and economic slowdown. The OPEC and its allies agreed to historic production cuts to stabilize prices, but they dropped to over 16 years low.
Referring the data of Pakistan Bureau of Statistics (PBS) Mian Nauman Kabir said the Sensitive Price Indicator based weekly inflation for the week, for the combined consumption group, witnessed an increase of 2.29 percent compared to the previous week, mainly due to the increase in fuel prices in the country.
The SPI inflation for the combined consumption group was recorded at 132.32 points compared to 129.36 points registered in the previous week. In the same way, as compared to the corresponding week of last year, the SPI inflation for the combined consumption group in the week witnessed an increase of 9.77 percent, he added.
He called for putting the economy on a balanced and sustainable growth trajectory, addressing the underlying structural vulnerabilities, as low export growth, limited foreign exchange reserves, documentation of economy and higher food inflation are still major challenges to the economy.
He urged the government to take concrete measures for easing out inflation that has further increased due to rise in oil prices and other essential commodities. He said that inflation is on higher side due to the impact of government's economic policies of soaring fuel rates, enhancing power and gas tariff, depreciating the local currency and imposing exorbitant duties on imported industry raw material.
He asked the Ministry of Finance to devise a strategy to control and ease out the impact of inflation. He said policy measures like zero borrowing by government from the State Bank of Pakistan in current financial year would decrease the local wheat price.
Reduction in fiscal deficit, primary surplus H2 of FY 20; monetary tightening and demand compression by austerity; complete restriction on supplementary grants are positive examples, he added. The downward trajectory in crude oil in the global market should result in downward pattern in domestic prices, he said.
Copyright Business Recorder, 2020
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