Inflation to stay elevated as energy becomes costlier: Ministry of Finance

In an apparent move to manage high expectations, the caretaker government on Wednesday said the economy continues to face both domestic and external challenges and “massive” petroleum price hikes twice in August and heavy electricity price shocks would keep inflationary pressures at elevated levels in coming months. “The two massive fuel price hikes witnessed in August and upward adjustment in energy tariffs, would strain the inflationary pressures in the coming months”, said the Economic Advisors’ Wing of the Ministry of Finance in its monthly economic update & outlook for August that was delayed for more than a week pending approval by caretaker finance minister Dr Shamshad Akhtar. Besides the oil and electricity rates, sugar prices have been witnessing continuous rise over the past few months, and price pressure was now shifting to wheat prices while oil prices are coming to haunt the people with lagged transportation costs. “The rise in fuel prices drives a broad-based increase (in prices) by impacting the transportation cost”, the Ministry of Finance said.