Though inflation has been high during the last many years, but the record-high February inflation has hit the masses hard and now families have started to opt for choices among what they can afford and what not.

It is mainly the food and transport prices which have broken the back of the common, who is running from pillar to post to make both ends meet. As per latest data of Pakistan Bureau of Statistics, the monthly inflation has risen to 31.6 per cent in the outgoing month year-on-year. It has hit the high of above 30 per cent as compared to above 20pc inflation which has been on record during the last few months. And with the Ramazan round the corner, the prices are going to further rise.

It may be mentioned here that after the passage of a supplementary bill last month by the Govt, which resulted in rise in goods and services tax with a view to generate Rs170 billion ($639 million) in extra revenue for the fiscal year, the situation is deteriorating with fast pace.

Another bad news from the economic front is that the merchandise exports have decreased by massive 10 per cent last month. It is mainly due to the high cost of doing business and the unavailability of raw materials that exporters have been unable to meet their targets. The Letter of Credit also took weigh on the export industry as industrialist cannot import raw materials for their industries to import curbs. In the first eight months (July to February) of 2022-23, exports were down 8.65pc at $18.79bn compared to $20.57bn in the corresponding period last year. The drop shows the government would find it difficult to achieve the export target this fiscal year.

Meanwhile, the rupee has started it losing streak again and yesterday, it was trading at 266.11 against the US dollar which created a panic among the market people.  Since the start of the current year, rupee has lost its value by 15pc fueling another round of inflation.

And according to financial analysts there is no light at the end of tunnel as the peak of price hike is expected next month during the holy month of Ramazan. They say that “Inflation will continued to rise till the  IMF bailout is secured but for that the IMF-mandated structural adjustments and Pak rupee depreciation is a common February has been detrimental to prices of kitchen items and the necessary essentials prices have been hiked massively. The price of onions, chicken meat , eggs, rice and pulses are sky-rocking while millers say that another crisis in the form of fluor shortage is also going to hit Karachi city. Tomato is the only vegetable which prices have registered a decrease by almost 20 per cent

Meanwhile, the finance ministry sources are hopeful that a staff-level agreement could be reached next week. As far as Pakistan is concerned, it is active in fulfilling the above conditions. In order to increase the interest rate by 150 to 250 basis points, the meeting of the Monetary Policy Committee of the State Bank was convened two weeks ago on March 2 in Karachi, in which an increase of up to 220 points is expected. Meanwhile, there has been a clear assurance from China regarding external financial financing. 700 million dollars have been received while one billion 20 million dollars will be received in three installments. Additional deposits of two and one billion dollars are also expected from Saudi Arabia and UAE, respectively.  By June 2023, foreign exchange reserves will exceed 10 billion dollars. The other day, the Finance Minister Ishaq Dar announced a fortnightly change in the prices of petroleum products. Due to this, the prices of petrol, light diesel and kerosene have been reduced slightly, but the current price of diesel will remain the same. The price of petrol has been reduced by Rs 5, light diesel by Rs 12 and kerosene by Rs 15 per litre. Heavy duty diesel is used in large quantities in the country. It would be appropriate if its rates were also reduced. As a result of the change, now the new prices of petrol will be Rs 267 per litre.

Meanwhile, analysts say that the earlier one-time increase in the prices of petroleum products in the last fortnight has put a heavy financial burden on the consumers. A slight reduction in this is welcome, but it would not make a big difference for the common man.

Meanwhile, analysts say that as a result of the increase in the impact on the necessities of life, the government must consider this aspect of the matter and create a mechanism that will benefit the common man. On the other hand, electricity rates in Karachi have been increased by one rupee and 71 paise per unit. Although this will not be applicable to the rest of the country, a lot of rate hikes have already been done in this regard and there are rumors of more hikes. The increase in the prices of all sources of energy has a direct impact on the common man, so the government should think a hundred times before increasing the prices of petrol, diesel, kerosene, electricity and gas. The public may or may not be able to bear more burdens. Under pressure from the International Monetary Fund (IMF), the facility of cheap power for export industries was withdrawn. According to the notification of the Ministry of Energy, the facility of cheap electricity for zero-rated export industries has been discontinued, the facility available to the export sector has ended today from March 1. The notification states that under the concessional facility, electricity was given to the export sector at a fixed rate of Rs 19.99 per unit.

Pakistan’s decision to increase the price of electricity on the demand of the IMF The notification said that this facility of cheap electricity was available to textile, sports, surgical and leather industries. This facility was announced by the Federal Minister of Finance in October 2022, this discounted facility was given until June 30, 2023. Currently, inflation in Pakistan is higher than other countries in the region, but the per capita income is lower compared to India, Bangladesh and Sri Lanka, which means less purchasing power.  Pakistan’s inflation rate in manifold that of some neighboring countries.

Published in The Daily National Courier, March, 03 2023

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