‘Inflation to remain considerably higher’
KARACHI: Consumers, already braving higher food prices, may see considerably higher inflation in FY20 amid any adjustments in energy prices, volatility in international oil markets along with rationalisation of taxes, the Pakistan Economic Survey 2018-19 projected.
The survey estimates headline Consumer Price Index (CPI) inflation to hover between seven to eight per cent in FY19. High utility prices, rising input costs and falling rupee against the dollar may mount further pressure on inflation in the coming months.
According to the latest survey published by the Ministry of Finance, the economy has witnessed demand pressure owing to persistent increase in the fiscal deficit during the last two years.
It may be noted here that the industry people had been pressurising the government for lowering the cost of doing business through cuts in various taxes and duties to curb food inflation.
However, the country has been witnessing demand push inflation as market forces resort to hoarding and create artificial food crisis.
The impact will be more visible in non food prices. The report expects price stability in case the provincial and federal governments ensure effective monitoring of prices and smooth supply of essential items.
In March this year, inflation surged to 9.4pc before slowing down to 8.8pc in April 8pc. The pressures on headline inflation are explained by adjustment in prices of electricity and gas, a significant increase in the perishable food prices, exchange rate depreciation along with reversal of global fuel prices.