Govt sees spike in inflationary pressures
Highlighting ‘immense pressures’ on fiscal account owing to revenue collection challenges, heavy interest payments and rehabilitation spending, the government on Tuesday increased its inflation forecast to 26 per cent — more than double the budgeted 11.5pc target. “The Consumer Price Index (CPI) inflation on a year-on-year basis for January is forecast in the range of 24-26pc,” said the Ministry of Finance in its Monthly Economic Update & Outlook, adding that the recent political and economic uncertainties both were causing inflationary expectations upward. The ministry also makes an upward revision in its inflation forecast to 24-26pc for the year, up from 21-23pc it had estimated in December. Yet the ministry appeared to be still underestimating the inflation as it already reached about 25pc last month and the impact of subsequent increases in interest rate, devaluation and increase in energy and fuel rates was yet to translate into CPI. The report said the government was currently facing the difficult task of supporting vulnerable segments of society and meeting other public spending needs, in particular, rising interest payments on debt servicing.