LAHORE: The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Businessmen Panel (BMP), expressing concern over the fresh uptick in inflation, said that the economy is again showing signs of strain, as consumer prices rose by 6.2 percent in October 2025 — the highest level in a year — mainly due to food supply disruptions, floods, and trade bottlenecks on the western borders.
FPCCI’s former president and BMP Chairman Mian Anjum Nisar said, here on Sunday, that while headline inflation had moderated earlier in 2025, the October reading shows a reversal of that trend, underscoring continued structural weaknesses in the economy. He said the surge in food prices, particularly vegetables and fruits, followed the devastating floods that hit Punjab and border closures with Afghanistan, which disrupted trade flows and restricted the supply of essential commodities.
He observed that the government’s earlier projection of inflation between five and six percent for October had been overtaken by a sharper rise caused by temporary shocks and persistent fiscal pressures. He added that such disruptions reveal the fragility of the supply chain and the urgent need for resilience planning in agriculture and logistics, as even a short-term supply interruption translates quickly into higher consumer prices.
Anjum Nisar said the central bank’s decision to maintain the policy rate at 11 percent for the fourth consecutive meeting reflected a cautious stance but warned that continued inflation above the official target range could limit monetary flexibility in the months ahead. He maintained that inflation management cannot rely solely on monetary tightening, stressing that fiscal prudence and real-sector reforms are equally essential to anchor price stability.
The BMP chief stated that inflation had earlier fallen below six percent in mid-2025 after almost two years of record highs but is now edging up again due to fading base effects, administrative price adjustments, and a weaker rupee. He said this trend threatens to slow industrial recovery and dent purchasing power, as businesses are already struggling with higher energy tariffs, elevated taxes, and weak domestic demand.
He pointed out that floods in August had swamped farmland and industrial hubs, killing over a thousand people and displacing millions, while border clashes with Afghanistan forced the closure of major crossings used for food and fuel trade. He said that although a temporary ceasefire was agreed upon later, movement of goods remained restricted, leading to shortages in north-western regions and price spikes across the country.
The BMP emphasized that these external shocks have coincided with internal structural problems such as excessive government borrowing, poor tax compliance, and high energy costs, which continue to erode business confidence.
Mian Anjum said the government must move beyond short-term administrative controls and pursue genuine reforms aimed at improving productivity, curbing non-development expenditure, and broadening the tax base.
He said that while the State Bank has highlighted positive signs — including improved crop output and a modest revival in industrial indicators — the private sector remains under pressure from rising input costs and contracting profit margins. The latest manufacturing data, he noted, shows the HBL Pakistan Manufacturing PMI still below the 50-point threshold, indicating weak demand and sluggish output.
Mian Anjum Nisar urged the authorities to develop a coordinated policy response to shield consumers and industries from further shocks. He said better coordination between fiscal and monetary authorities is vital to maintain price stability without stifling growth. He also called for rationalization of energy prices, improvement in border trade management, and accelerated agricultural rehabilitation in flood-affected regions to prevent further food inflation.
He remarked that inflation remains one of the most serious challenges to sustainable growth, as it disproportionately affects low-income households and small enterprises. “Rising prices are not just a statistical concern but a reflection of deep-rooted inefficiencies that demand structural change,” he said, adding that the government must focus on stability, fiscal discipline, and transparency to restore business confidence.
According to the BMP, the recent inflationary spike serves as a reminder that Pakistan’s economy remains vulnerable to both natural and policy-induced shocks. The group reiterated its call for broad-based economic reforms, efficient governance, and sectoral diversification to reduce dependence on imported inputs and speculative currency pressures.
Mian Anjum Nisar concluded that unless decisive steps are taken to manage supply disruptions, rationalize energy pricing, and support local production, inflation could continue to undermine growth momentum and investor sentiment in the months ahead. He expressed hope that the government would respond swiftly to stabilize prices and protect economic recovery from slipping into stagnation once again.
Copyright media, 2025
American Dollar Exchange Rate