The Ferozepur Road Industrial Association (FRIA) senior vice chairman Shahbaz Aslam has said that the most serious challenge to the economy for the government in the current fiscal year would be inflation, because it is already hitting economy due to continuous raise in oil prices and depreciation of local currency.
Shahbaz Aslam warned the high cost of doing business has been hurting the economic growth, as the inflation rate bounced back in concluding month, hurting the trade and industry the most, who faced the brunt of a staggering 520% increase in gas prices.
Quoting the Pakistan Bureau of Statistics, he said that the Consumer Price Index surged to 21.2% last month compared to a year ago. The increase was more than market expectations and has lessened the prospects for a cut in the interest rates.
This reading, the first announced by the PBS after the recently concluded International Monetary Fund (IMF) talks, in which the global lender also cut the inflation forecast for Pakistan to 22.8%, may strengthen the IMF’s view of keeping the policy rate unchanged until core inflation starts easing out when the Monetary Policy Committee (MPC) meets.
The FRIA SVC predicted that inflation would remain high and may even increase further due to market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel.