Karachi - Pakistan's food price inflation is set to register
another record high by the end of this month, the head of the central
bank said Monday.
'Food inflation will touch 26 per cent and maybe more in the
upcoming days,' State Bank of Pakistan Governor Shamshad Akhtar said.
The bank is also fighting a tough battle to stem overall inflation
due to soaring international oil prices amid domestic and worldwide
food shortages.
Pakistan's annual inflation has already doubled from 12.5 per cent
to 25.5 per cent while the overall core inflation is also touching
double digits.
'I think our core inflation is going to be a record high of around
10 to 11 per cent, I think 11 per cent,' Akhtar said in an interview
with CNBC television.
The central bank on Thursday took drastic measures to rein in
government borrowing and tried to put brakes on inflation by raising
benchmark interest rates by 150 basis points to 12 per cent.
The huge hike in interest rates shook the stock and financial
markets as the main Karachi Stock Exchange fell by 4.5 per cent on
both Friday and Monday.
Akhtar defended the measures, saying government borrowing and
inflation had reached a point where a rate increase was inevitable.
'If we wouldn't have done so (raising the rates on Thursday) we
might have been raising the interest by 300 per cent in future,'
Akhtar said.
Despite the stock market's woes, the central bank measures eased
pressures on the Pakistan rupee and allowed it to gain about 3 per
cent against the US dollar since Friday.
The rupee on Monday was trading at 67.60-68.05 (buying-selling)
against the dollar in the inter-bank market after hitting as low as
70.00 at one point of time last Thursday.
The rupee had lost about 14 per cent against the US dollar during
the last 10 months.
Akhtar appealed to the government again Monday to stop borrowing
from the central bank.
'I want the government to retire its debts to the central bank
against these inflows,' Akthar told CNBC.
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