ISLAMABAD - The Pakistan Institute of Development Economics (PIDE) in its latest survey report revealed that inflation would remain far above then the estimated target of 12 per cent during the ongoing financial year 2011-2012 mainly due to the governments borrowing from central bank, continuously rising energy and food prices. About 95.5 per cent of the respondents of the survey are of the view that in current year (2011-12) inflation will be higher than the target rate (12 per cent) and 4.4 per cent of the respondents are of the view that it will remain the same i.e. 12 per cent, said the PIDE-inflation expectation survey released on Wednesday. The results of the survey indicated that inflation would remain about 15 per cent for the current financial year 2011-2012. In Pakistan, the governments borrowing from State Bank of Pakistan (SBP) to finance budget deficit, continuously rising energy and food prices and low policy credibility have contributed to push up inflation for last several months. In the first half of the year 2011, there has been strong upward pressure on inflation in the country, Consumer Price Indicator (CPI) based inflation was 14.2 per cent in January 2011, 13.2 per cent in March 2011 and 13.2 per cent in May 2011. However, food inflation decline from 20.4 per cent in January 2011 to 15.9 per cent in May 2011. Both general CPI inflation and food inflation fell down as compared to the previous months, which are showing a positive indicator to form expectations for future inflation. Despite this decline in inflation, public is still expecting higher inflation. Pakistans economy is facing double digit inflation for last several years and this high inflation has an economic cost. It undermines the economys ability to generate long-lasting gains in output, incomes and employment. It creates uncertainty for consumers, businesses and investors, and erodes the value of incomes and savings. High inflation and expectations of high inflation also encourage speculative activities rather than investments that increase production capacity. A credible commitment by the monetary authorities to keep inflation low and stable provides a climate conducive to sound economic decisions. It also leads to lower interest rates, supporting productive investments that allow the economy to grow at a sustainable, non-inflationary pace over time and to generate higher incomes and new jobs, said the survey. According to 44.4 per cent respondents, persistence of high inflation is fuelling the public expectations about future high inflation followed by policy credibility (20 percent), law and order situation (17.7 percent), political crisis in some of the oil producing countries and implementation of R-GST (13.3 percent). According to the survey 36.4 percent respondent think that bad governance is the major cause of high inflation. Other important causes are food prices (29.5 percent), utility prices (22.2) and oil prices (15.9 percent) are the other major contributor of high inflation in Pakistan, followed by gold prices, money supply and fiscal deficit. According to 37.8 percent respondents, current inflation is cost-push and 6.7 percent of the respondents think that it is demand-pull and structural in nature. While majority of the respondents (48.9 percent) think that current inflation is because of all three ie demand pull, cost push and structural. In response to a question that which class of the society is most hurt when there is an increase in inflation. Majority of the respondents (55.6 percent) reply that middle class is most hurt by an increase in inflation, while 44.4 percent of the respondents are of the view that lower class is most hurt by an increase in inflation. In response to the question regarding the effectiveness of the policy to curb inflation, a vast majority of the respondents (91.3 percent) suggest that both monetary and fiscal policy should be used to curb the inflation. Monetary and fiscal policy in isolation is not an effective way to control the inflation. The best policy rate to control inflation according to 41.3 percent respondents is the lower policy rate. While 39.1 percent think that no change is required and only 19.6 percent say it should be higher than the current policy rate (14 percent). Pak rupee (Rs) is continuously under pressure since last several months. According to the results of survey 75.6 percent of the respondents are expecting that rupee (Rs) will depreciate in the next six months. About 15.6 percent of the respondents are expecting that exchange rate will appreciate, while remaining are of the view that there will be no change in it in the next six months. Survey results indicate that experts are optimistic about growth rate in the next six months. About 41.3 percent of the respondents are of the view that growth rate will remain the same in the next six months, whereas 34.8 percent are expecting higher growth in the coming months and 23.9 percent are expecting lower growth. Majority of the respondents (58.7 percent) considered that current economic policies are not useful to enhance the growth and 32.6 percent of the respondents are not clear. A vast majority (69.6 percent) of the respondents are expecting high unemployment in the next six months.