Growing Inflation

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The increase in the price of petroleum goods and the electricity tariff is making things difficult. It has effectively harmed the purchasing power and mobility of the general public. Despite the fact that this enormous increase in oil and electricity was expected, the shocking application of both in less than a week has placed everyone in a bind. The shock and awe are palpable, and people are wondering and understandably anxious about their fate and way of life in the days and weeks ahead. The government’s decision to raise petrol prices by another Rs30 per litre on Thursday night came as a shock to the masses, who had barely recovered from a previous storm. Similarly, on the same day, the power tariff was increased by Rs7.9 per unit on account of an increase in fuel prices and depreciation of the rupee has come as a complete devastation. This new expenditure critically undermines the home budget of not only the common man, but will also impact the entire economic circle as its spiraling effect will be felt across the board. As a result, inflation has begun to grow naturally. It is revealing its ugly face as the demand and supply chains appear to be shattered. Furthermore, the aftermath of global depreciation has driven the price index of food staples, edible oil, and pulses sky-high, and it is becoming accustomed to the daily rise of the greenback. Inflation has increased to a nearly two-and-a-half-year high of 13.76 percent as of June 1. This is accompanied by a rise in bank interest rates, as exports fall and imports are squeezed excessively. Government efforts to maintain a delicate balance have yet to bear fruit, and Pakistan’s dwindling foreign reserves are putting the country in the same boat as Sri Lanka. This unfortunate circumstance has to be deterred, and the return from the brink is only possible if immediate and corrective long-term measures are introduced. The macro-economic format as well as debt-servicing has to be rescheduled. This auger a new dialogue with the IMF and that too on changed realities. No point is revising or buffering up the existing deal, as that stands almost liquidated. This along with a new tranche of $1 billion from the IMF, and an extended programme, could set the circle of the economy roaming. What is desired is to lessen the burden of oil shock on the economy, and ensure that food prices are well within reach. This, combined with a new IMF tranche of $1 billion and an extended programme, could send the economy into a tailspin. It is hoped that the economic impact of the oil shock would be reduced, and that food costs will remain affordable.

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