There is a dire need to reduce the cost of doing business, besides developing a new price control mechanism, as inflation has broken records over the last three years, said Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Businessmen Panel Chairman Mian Anjum Nisar.
In a statement on Saturday, Nisar said that food prices had doubled due to high taxes, rising oil prices and a persistent jump in electricity and gas tariffs.
“The stringent conditions set by the International Monetary Fund (IMF) for financial assistance have brought a fresh wave of price hike,” he said, adding that the record-high inflation was already denting the industries’ productivity amid local currency devaluation.
He was of the view that the absolute dependence on borrowing had devastated the economy.
The cost of production had hiked significantly due to higher taxes and increased utility tariffs, which rendered Pakistani exports uncompetitive in the global market, he added.
Quoting statistics, Nisar said that electricity tariff increased by 57% to Rs6.38 per unit in October 2021 from Rs4.06 per unit in October 2018.
During the same period, the price of an LPG cylinder (11.67 kg) increased by 51% to Rs2,322 from Rs1,536 and petrol prices rose by 49% to Rs138.73 from Rs93.8 per litre.
The Consumer Price Index (CPI) surged by 27.36% during 2018-21 as compared to the rise of 10.94% during 2015-18.
Similarly, the Sensitive Price Indicator (SPI) soared by 35.82% in 2018-21 as compared to the rise of 3.73% in 2015-18 and the Wholesale Price Index (WPI) swelled by 32.44% as against the increase of 6.46% in 2015-18.
“Pakistan has been ranked as the fourth most expensive country in the world, as the rate of inflation came in at 9% while the inflation rate in India is 4.3%,” he lamented.
In October, the consumer item prices went up to 9% from 8.4%, while the WPI also rose sharply by 19.6%, he added.
The government had set the average inflation target for the ongoing fiscal year at 8.5%, indicating that the year-on-year inflation may remain in double digits in 2021-22, he said.
“The most serious threat to the economy in the ongoing fiscal year has become inflation,” Nisar remarked. “Low inflation helps economic activities, while high inflation hurts economic growth.”
The high inflation environment adversely affected the decision-making of economic agents like investors, savers, consumers and producers due to uncertainty about the expected payoff from their decisions, he said.
Pakistan Industrial and Traders Associations Front (PIAF) Senior Vice Chairman Nasir Hameed was of the view that the inflation above 6% could hurt economic growth and a vigilant policy was required to keep it under control.
He said that the inflation was skyrocketing, which made it difficult for the people to cope with the situation, he said.
The country was facing “stagflation”, because economic growth was slow while unemployment and prices of goods and services were high, he added.
Pakistan Footwear Manufacturers Association former chairman Javed Siddiqi said that the present situation indicated the complete breakdown of administration in federal and provincial governments, besides highlighting the impact of unprecedented taxation on the dictation of the IMF.
Published in The Express Tribune, October 31st, 2021.
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