New steps to bring down inflation, Finance Ministry claims

The ministry of finance on Monday has claimed that government’s measures would bring in better results in easing out inflation in coming days that had touched 12 years highest level of 14.6 percent in January this year.

The federal government is facing criticism from political parties after Pakistan Bureau of Statistics revealed that inflation had recorded at 14.6 percent in January 2020 scaling the highest level in 12 years.

According to the economic experts, inflation is on higher side due to the impact of government’s economic policies of increasing power and gas prices, depreciating the currency, imposing duties and imported commodities and enhancing oil prices.

On Monday, the ministry of finance has issued handout to explain the government’s measures to control inflation reasons behind increase in inflation rate. The ministry has said that the outcome of stabilisation policies, agriculture sector interventions, rigorous monitoring at federal/provincial levels and favourable weather will bring in better results in easing out inflation and sustain the economy towards growth and productivity in the coming days.

“Adverse effects of pre-monsoon rains on wheat crop, disruption of supply chain of essential items due to harsh winters and thick fog, 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,” the ministry said.

The Finance Division noted that another 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%, etc in

December 2019 over December 2018 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.

While the factors above are likely to ease the inflation, the government has also taken several relief measures to protect the vulnerable from the price-hike.

These measures include provision of subsidy to Utility Stores Corporation on 05 essential items for which Rs7 billion has been transferred to Ministry of Industries and Production; Rs226.5 billion allocated in the budget, Rs. 141 billion already released so far, for low end consumers using less than 300 units of electricity in a month; PM’s Ehsaas program with doubled social safety net allocation of Rs.190bn from 100bn; out of Rs. 24 billion allocated for gas subsidy, Rs12 billion have so far been released; and Rs. 1000 per family given to 5.1 million families as a special transfer in August, 2019.