Pakistan: Inflation rate reversal of positive economic trend

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Pakistan People’s Party Parliamentarian Sindh chapter General Secretary Taj Haider termed the rising inflation rate and the raising of Bank Rate by the State Bank of Pakistan as reversal of a positive economic trend, which would result in serious consequences for national economy. Haider reminded that back in 2008 when the PPP government had taken over the inflation rate in Pakistan had touched 25 percent. That rate was gradually brought down with sound economic policies of raising national production. In June 2013, inflation rate had come down to as low as 5.8 percent. Quite alarmingly in August and September 2013 it had risen to 8.5% and 8.9 percent indicating a serious trend of rapidly rising inflation in the country. The Bank Rate in 2008 was abnormally high at 14 percent. This had greatly raised the cost of doing business. PPP government was repeatedly advised against bringing down the Bank Rate as according to text book economists a reduction in Bank Rate creates inflationary pressures, he said adding that the PPP government faced the challenge in order to boost production and to promote business activity and started reducing the Bank Rate gradually. By the end of its tenure PPP government had brought down the Bank Rate by a full 5 percentage points to 9 percent. He was of the opinion that the recent increase of the Bank Rate by half percentage points had obviously been made with the purpose of arresting inflation. However, in the present scenario it will have just the opposite effect by raising the cost of doing business, restarting production and causing lay-off of workers and employees. He said that a vicious negative economic cycle had been set in by the present government in its first 100 days by raising the prices of wheat, electricity, petroleum and petroleum products and now by increasing the Bank Rate.