Low wheat output, high expenses

Three days after the central bank increased the interest rates to arrest inflation, the Ministry of Finance hoped for a marginal slowdown in the inflation rate but warned that the country will also see less than the targeted production of wheat. In its monthly economic outlook report, the finance ministry also said that expenditure will remain higher than last year due to additional flood-related requirements and the industrial output will also remain low. The report painted an overall grim picture of the economy. According to the Economic Advisor Wing report, it is expected that the consumer price index (CPI) inflation on a year-on-year basis will decline marginally in the month of November and may remain in the range of 23-25%. Inflationary pressure is expected to ease out slightly on a monthon-month basis due to smooth domestic supplies, unchanged energy prices in November and a stable exchange rate, it added. In a policy statement on Friday, the central bank said that inflation was being driven increasingly by persistent global and domestic supply shocks that were raising costs.