Ministry of Finance has stated that the outcome of stabilization policies, agriculture sector interventions, rigorous monitoring at federal/provincial levels and favorable weather will ease out inflation and sustain the economy towards growth and productivity in the coming days.
In an official statement, the Ministry said:
Adverse effects of pre-monsoon rains on wheat crop, disruption of supply chain of essential items due to harsh winters and thick fog, delay in harvest and arrival of crop in the market and lower production of vegetables, including tomato in Sindh, led to a higher food inflation but the change of weather and better supply of potatoes, tomatoes and onions should result in smooth supply and decrease price pressure.
Another factor contributing to higher inflation was the global price impact due to international commodity prices. Palm oil price increased by 43.9%, Soybean oil 12.8%, Crude oil 16.6%, etc in December 2019 compared to December 2018 which contributed to higher inflation. The downward trajectory in crude oil in the market will result in a downward pattern in domestic prices in the coming months.
While the factors above are likely to ease inflation, the government has also taken several relief measures to protect the vulnerable from the price-hikes.
According to the statement, these measures include:
The Ministry of Finance said the government had also devised a strategy to control and ease out the impact of inflation through a host of policy measures which included ECC permission for import of 0.3 million tons of wheat to decrease the local wheat price and meet the domestic requirement.
According to the released statement, the government did not borrow money from SBP in the current FY. Government retired Rs. 837.2 billion (1st July-17th January 2020) as compared to the borrowing of Rs. 3770.5 billion the same period of last year.
Additional improvements which will help ease inflation include: