ISLAMABAD: The Pakistan Industrial and Traders Association Front (PIAF) has urged the government to take concrete measures for easing out inflation that increased to over 9% in Sept from Aug 8.2%.
PIAF Chairman Mian Nauman Kabir, in a joint statement along with senior vice chairman Nasir Hameed and vice chairman Javed Iqbal, 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.
It is to be noted that the PBS calculates the inflation rate by measuring the prices of a basket of 480 common goods and services, such as the cost of education, house rent, utility bills and food and beverages. An increase in the inflation rate means the prices of goods and services have increased.
According to reports, higher food item prices such as tomatoes, wheat and potatoes pushed the inflation up during September this year, said senior research analyst Karim Punjani. The rural inflation has been higher in September as compared to urban. It is because the rural inflation depends more on food items. The rural inflation increased by 11.1% as compared to urban inflation of 7.7%.
Inflation generally increases due to demand. But the monsoon damaged crops and also disrupted logistics, which pushed the prices up for essential goods. Moreover, wheat and sugar prices also went up.
He said that increasing policy or interest rates is the most important tool for a country’s central bank to leash inflation. Higher interest rates help curtail spending by people and companies. It in turn reduces demand, which tends to bring down prices. There’s growth in the economy but it has not happened across the board, as some sectors have shown growth but not all. So, the State Bank may not think of increasing interest rates any time soon unless the economy shows sustainable growth, he said. He asked the Ministry of Finance to devise a strategy to control and ease out the impact of inflation.
Nauman Kabir noted that major factor contributing to higher inflation was the global price impact due to international commodity prices like Palm oil increased by 43.9%, Soybean oil by 12.8%, Crude oil by 16.6% also pushed up the domestic prices. Downward trajectory in crude oil in the market will result in downward pattern in domestic prices in coming months. PIAF senior vice chairman Nasir Hameed said that the outcome of stabilization policies, agriculture sector interventions, rigorous monitoring at federal and provincial levels and favourable weather can bring in better results in easing out inflation and sustain the economy towards growth and productivity.
Nasir Hameed said that adverse effects of pre-monsoon rains on wheat crop, disruption of supply chain of essential items, delay in harvest and arrival of crop in the market and lower production of vegetables, including tomato in Sindh, led to a higher food inflation but the change of weather and better supply of potatoes, tomatoes and onions should result in smooth supply and decrease price pressure,” he added.
PIAF vice chairman Javed Siddiqi asked the government to also take relief measures to protect the vulnerable from the price-hike. These measures include provision of subsidy to Utility Stores Corporation on essential items for which Rs7 billion has already been transferred to Ministry of Industries and Production.
Javed Iqbal said that price monitoring cell to check price hikes of essential food items; network of Utility Store outlets should also be expanded for provision of essential items. He said provincial governments monitoring display of price list and quality of items in open market and effective measures of CCP to control cartelization and undue profiteering can also control the inflation to some extent.