ISLAMABAD    -          The government on Thursday has admitted that inflation rate has increased due to its own economic policies that included overdue gas and electricity prices, market-based exchange rate adjustments and increase in interest rates.

Inflation measured through and Consumer Price Index (CPI) has enhanced by 11.1 percent during first six months (July to December) of the current fiscal year. Meanwhile, weekly inflation, measured through Sensitive Price Indicator (SPI), has gone up by 14.9 percent. “The rise in inflation is mainly due to delay in policy adjustments required during FY2018. Present government has to make difficult decisions of upward adjustment in overdue gas and electricity prices, market-based exchange rate adjustments, increase in interest rates etc to correct the macroeconomic imbalances,” the ministry of finance has stated in written reply, which was presented in National Assembly. According to the ministry of finance, other factors that led in increasing inflation was hike in international commodity prices like palm oil, soyabean oil, crude oil, pulses etc. also played role in increasing the dearness.

Inflation is continuously increasing as it had recently touched 9-year highest level of 12.7 percent. The International Monetary Fund (IMF) had recently projected that inflation would decelerate slightly to 11.8 percent in ongoing fiscal year (FY 2020) as against 13 percent of its earlier projection. However, the government had already estimated that inflation in would remain higher in the range of 11 percent and 13 percent for the current fiscal year.

The ministry of finance informed that government had taken policy measures to control the inflation rate. The policy measures included regularly monitoring the supply position of essential items, discontinued borrowing from the State Bank of Pakistan, which has inflationary impact. Similarly, the government is making efforts to contain fiscal deficit at the targeted level. Following austerity measures with complete restriction on supplementary grants to control aggregate demand and to ease out inflationary pressure.

 Other measures, which are taken to control inflation, are establishing a prices monitoring cell in Ministry of National Food Security & Research to analyze and anticipate commodity supply and pricing trend and proposing pre-emptive measures to ensure availability of food commodities and monitor price hikes of essential food commodities. Similarly, the SBP had increased policy rate to 13.25 basis points since July, 2018. FBR is taking effective measures to curb smuggling of ‘essential items. PM’s National Agriculture Emergency Program is being implemented to ensure provision of essential food items through increase in agriculture production.

According to the ministry of finance, the government is expanding the network of Sasta Bazaars and Utility Store outlets for provision of smooth supply of essential items to the general public to ease the pressure of the inflation. Provincial governments and ICT administration are ensuring regular display of price list and quality of essential items in open market and Sasta Bazaars.

On the directive of Prime Minister, Rs 6 billion transferred to Ministry of Industries and Production to provide subsidy to USC on five essential items. Provincial governments are taking necessary steps to check undue profit margin between wholesalers & retailers and to minimize the role of middle man. Meanwhile, the government had allocated a subsidy of Rs. 226.5 billion in the budget for customers who use less than 300 units of electricity in a month and an amount of Rs 94.123 billion released so far. ECC of the Cabinet has provided relief to the ‘Roti Tandoors’ for provision of cheap roti to common man by giving the subsidy of Rs. 1.5 billion.