ISLAMABAD-The Pakistan Industrial and Traders Associations Front (PIAF) has warned the record inflation and high cost of doing business continued to hurt economic growth, demanding a careful policy to keep it in control, as weekly inflation has surged to new highs for the third consecutive week.
Quoting the data, PIAF Chairman Faheemur Rehman Saigol revealed a year-on-year increase of 38.66 percent in short-term inflation for the week ending on September 21, marking an alarming trend in rising prices. The ongoing depreciation of the Pakistani rupee, coupled with soaring petrol prices, sales tax burdens, and mounting electricity bills are identified as the primary contributors to the persistent inflationary trend.
But the most important factor contributing to inflation is the steep increase in petroleum products. During the week under review, the retail price of petrol witnessed an 8.51 percent increase, while diesel prices rose by 5.54 percent. These price hikes have led to elevated transport costs and have subsequently driven up the cost of moving goods, affecting consumers across the country. He said that to meet local demand, Pakistan has become increasingly reliant on imports of essential vegetables, including tomatoes, onions, and potatoes, primarily sourced from neighbouring Afghanistan.
The SPI basket, comprising 51 essential items, demonstrated notable fluctuations. Prices of 22 goods soared, 11 experienced price drops, and 18 remained unchanged compared to the previous week. Key items that witnessed substantial price increases compared to the same week the previous year include electricity charges, gas charges, rice, sugar, wheat flour, and more. Whereas, on a week-on-week basis, the largest price increases were observed in chicken, garlic, onions, shirting fabric, and matchboxes.
It is pertinent to mention here that according to the latest International Monetary Fund (IMF) forecast, the average Consumer Price Index (CPI) for the current fiscal year is projected to be 25.9 percent, slightly down from the previous year’s 29.6 percent. The PIAF chairman observed that the government’s inability, ill planning and financial woes had multiplied the miseries of businesses which were facing unscheduled power outages across the country. At the same time, they were already paying heavy electricity bills of up to Rs50 per unit, including surcharges and other taxes, he added.
He said all the major industrial cities of the country were facing unannounced electricity load-shedding and stressed the need to rectify technical faults immediately. He said that the high cost of production is damaging Pakistan’s trade and industry, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on the power sector. He urged the government to shut down all costly oil-fired power plants in order to ensure consumers had access to cheaper energy. He lamented that the previous administration did not prioritise the rehabilitation and maintenance of older power plants, resulting in multiple system constraints and significant losses.
He argued that underutilisation of efficient power plants due to RLNG scarcity could be avoided if the Ministry of Energy assesses and manages RLNG availability in a timely manner. He urged the ministry to take a proactive role in ensuring the timely supply of RLNG, so as not to disrupt the operation of the efficient power plants. Thus, he added, the power sector’s inefficiencies could be mitigated without passing them on to end consumers.