Soaring high

With weekly and monthly prices of essential commodities in Pakistan already witnessing a record high, the finance ministry has warned that inflation will rise further, according to Dawn. According to Pakistan’s newspaper, the second-round effect of the policy decision had led to decisions like a rise in energy and fuel prices, the central bank’s policy rate, and the rupee’s depreciation to secure International Monetary Fund’s funding. Inflation may further jack up as a result of a second-round effect, the finance ministry said in its Monthly Economic Update and Outlook, adding that the recent political and economic uncertainties were causing inflationary expectations upwards.The short-term rate of inflation measured by the Sensitive Price Indicator (SPI) last week hit a record 46.65 per cent, while monthly inflation recorded by the Consumer Price Index (CPI) reached 31.6 per cent in February — the highest in six decades. However, the SPI has slightly eased to 45.36 per cent in the latest reading released on Friday. The ministry explained that inflation was expected to stay at an elevated level owing to market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel. The ministry also said that due to the lagged effect of floods, the production losses have not yet been fully recovered, especially those of major agricultural crops.