LAHORE  - The industry stakeholders have warned the authorities that inflation above 6 percent can hurt economic growth in Pakistan and a careful policy is required to keep it in control. 

Quoting the data of the central bank, they stated that inflation below 5.67% may be favourable for economic growth while above 6.05% can hurt growth. 

They said that the most serious threat to the economy in the new fiscal year would be inflation owing to the high spending of the government, triggering inflation in election year. Rejecting the government plan of approaching the International Monetary Fund for financial assistance once again, they said it would bring a fresh wave of price-hike, as inflation is already rising due to continuous raise in oil prices and depreciation of local currency. 

Pakistan Industrial & Traders Associations Front (PIAF) chairman Irfan Iqbal sheikh said the IMF loan would have devastating effects on the economy, as with more taxes and increased rates of utilities, cost of production would further increase. This will render Pakistani exports uncompetitive in the global market. 

PIAF chairman said that there is a consensus that a low inflation rate helps economic activities, while high inflation hurts economic growth. The high inflation environment affects decision making of all economic agents in economy, like investors, savers, consumers and producers through uncertainty about the expected payoffs from their decisions. Moreover, a persistently high inflation also causes erosion of the value of the local currency in terms of foreign currencies. Such uncertainties, in turn, have adverse implications for economic activities. 

Chairman PIAF said low inflation helps economic agents to predict outcome of their economic decisions with fair level of certainty. Especially, producers follow their plans for business expansion with more confidence; and new investment is undertaken in the expectation of predictable returns.