The massive rise in inflation in Pakistan could result in demand destruction and may create difficulties for the government to meet its tax targets, according to a media report.
“With global oil prices increasing, Pakistan will find it hard to foot the import bill. Pressed hard by the highest inflation in January (13 per cent), people may not find any relief in February either,” said Abdullah Umer of Ismail Iqbal Securities.
Farmers have also expressed fears that the agriculture sector also could be the worst victim with production costs rising substantially, causing a liquidity crunch in the rural economy.
Khalid Khokhar of Pakistan Kissan Ittehad said that with fertilizer already priced out of farmers’ reach, this price hike is bound to hit the production of different food and horticulture items.
“If 5-10pc of the national production of food, fruits and vegetables is lost to these issues, no amount of international lending will be able to help Pakistan,” Khokhar added.
The Imran Khan government’s recent massive rise in prices of petrol and diesel, along with other petroleum products in Pakistan, has sent the prices of food, transport and other essential items to new highs and put more pressure on lower and middle-income groups.
The Dairy and Cattle Farmers Association (DCFA) had already alarmed the masses about a possible jump of Rs60 per litre in fresh milk price in two phases due to the imposition of 17 per cent general sales tax on inputs of milk products followed by the rising cost of production, according to Dawn.