Soaring food prices and higher energy tariffs not only kept the weekly inflation over 40 per cent for the fifth consecutive week but also pushed the same to a six-month high, as inflation continues hitting the people hard, whose shrinking purchasing power means they are neither able to fully meet their personal needs nor can help revitalise national economy by boosting domestic demand. The latest figures released by the Pakistan Bureau of Statistic come despite the official claims and the viewpoint shared by top international financial institutions, materialising the stance held by many that you can’t arrest inflation by increasing the energy tariffs. Hence, the weekly inflation rate – measured by the Sensitive Price Indicator (SPI) – remained at a six-month high of 43.16pc in the week ending December 14 thanks to the high prices of sugar, pulses, eggs, rice and food items.

The alarming trend means the gains made during the last few months are being reversed as the SPI reached the highest level since the week ending on June 1, when it was recorded at 43.17pc. Meanwhile, the higher and sustained inflation is also making the rate cuts a distant possibility given the State Bank of Pakistan (SBP) is following monetary tightening – a policy advocated by institutions like the International Monetary Fund (IMF) as well as US Federal Reserve, European Central Bank and other top central banks. The higher interest rates have paralysed the economy where the higher borrowing costs is skyrocketing the cost of doing business, which is already much higher in Pakistan than desired level around the globe. In this environment, there is doubt that the confidence level among the businessmen and industrialists will be down, as they were hoping for interest rate cuts. One must remember that no expansion in existing businesses and establishment of new ones mean there are neither job creation opportunities nor wage hikes, further worsening the prevailing cost-of-living crisis.

Credit: Independent News Pakistan (INP)