ISLAMABAD - The federal government on Wednesday warned that inflation would rise in the months to come due to increase in oil prices in international market, rupee depreciation and recent hike in gas rates.

The National Price Monitoring Committee, which met under the chair of Special Secretary Finance, reviewed the inflationary trend in the country. The main reason for the rise is increase in international crude oil prices and the recent decisions of the government.

A combination of factors such as strong domestic demand, which is also visible from pressure on external and fiscal side, possible lagged impact of recent upward adjustment in gas prices, exchange rate depreciation are contributing to recent pickup in inflation.

The inflation measured through CPI had increased by 5.6 percent during first quarter (Jul-September) of the current fiscal year as compared to 3.39 percent of the same period last year. The core inflation increased by 8.0 percent in September 2018 as compared to 5.4 percent in the comparable month of last year. The trend is alarming and signals of rising inflation in coming months.

The International Monetary Fund (IMF) had reportedly noted that inflation rate in Pakistan may touch 14 percent during ongoing fiscal year. For FY19, State Bank of Pakistan (SBP)’s inflation projections show that the average headline inflation is expected to fall in the revised forecast range of 6.5-7.5 percent. Earlier, the previous PML-N government had projected inflation at 6 percent for the ongoing fiscal year. However, the incumbent government admitted that inflation would increase due to some of its economic decisions.

According to Ministry of Finance, chairman informed the forum that there is lot of flux that characterizes the world economy at present, emerging markets are facing uncertainty. Their currencies have devalued significantly. The Federal Reserve is raising interest rate. After seeing a decade long zero rate it has surged 2.5 percent which is pushing dollar relative to other currencies. Oil prices have crossed $85 barrel and are estimated to hit $90.The rising inflation is a challenge. He urged the provincial governments that they should adhere to strict price monitoring and remain vigilant that no supply disruption of commodities in the markets takes place.

The committee observed the rising SPI trend over the last six weeks. The weekly SPI, which monitors the price movement of 53 essential items, recorded an increase of 3.65 percent on 11th October, 2018. The significant impact came from increase in gas prices by 15.45 percent over previous week.

The meeting also reviewed the prices of essential items in Sasta Bazaars and open markets and noted that the prices are significantly lower in Sasta Bazaars as compared to open markets.

The chair emphasized that in case if the provincial governments and other stakeholders see any shortage of essential consumer items they should immediately report to the NPMC committee so that the federal government takes appropriate measures. He also asked the Competition Commission of Pakistan to remain vigilant that no cartelization takes place.

In view of difficult times ahead the meeting decided as under:- The provincial governments will fully activate price monitoring and control mechanism at district level and below to ensure price stability.

The provincial governments and federal government will ensure adequate supply of commodities to avoid supply disruption and consequent price hike.

The district government will launch a campaign as and when necessary to stop hoarding of commodities for price manipulation.

In case of any expected shortfall in production of agriculture commodities, the relevant forum will be intimated for taking necessary action. The provinces should focus on oilseed crops and pulses cultivation to reduce the import bill.

It was also emphasized that provincial governments and ICT administration to extend the coverage of Sasta/Itwar Bazaars so that common man may get the commodities at reasonable price.

The meeting was attended by the representatives from the provinces of Punjab, Sindh, Khyber Pakhthunkhwa, Balochistan, Islamabad Capital Territory, Ministries of Industries, Law and Justice, Commerce, National Food Security and Research, Planning Development and Reforms, Inter Provincial Coordination, Statistics Division, Competition Commission of Pakistan (CCP), Pakistan Bureau of Statistics, Utility Stores Corporation and Federal Board of Revenue.