KARACHI, April 6: All major monetary indictors are pointing towards the high inflation trend prevailing in the economy as shown by the latest figures issued by the State Bank. Sudden jump in the government’s budgetary borrowing and very high growth of money circulation has pushed the monetary growth (M2) much ahead of the last year’s growth.

The SBP figures showed that the government raised Rs117 billion for budgetary support, though lower than last year but took sharp rise in March.

The second quarterly report recently issued by the State Bank expressed firm control over the monetary growth but the sudden jump even crossed the last year’s growth rate of 8.99 per cent. From July to March 24, the monetary growth rose at the rate of 9.94 per cent.

In terms of money the growth was much higher as the amount was Rs339 billion compared to Rs266 billion during the corresponding period of last year.

Supply of currency also rose at a higher rate than previous year. The SBP figures showed that currency supply grew at the rate of 13.81 per cent against 13.52 per cent of last year.In terms of money during the period an amount of Rs102 billion were pumped into the system compared to Rs90 billion during the same period last year.

“The latest SBP data showed that the inflation is crippling through the higher supply of money,” said Amir Alam, an analyst.

He said the SBP was responsible for this increasing monetary growth, thought the SBP still believed that the food prices were real reason for higher inflation.

However, the SBP explained that the huge inflows of the foreign exchange were a major reason for higher money supply along with the extra expenditures in Azad Kashmir to support quake victims.

“The end result is that the inflation will remain high and that is the real source of concern for the common man whose purchasing power is being slashed each year,” said Alam. The SBP expects the main inflation will remain in the range of 6.5 to 7.5 per cent but analysts believe it will remain close to 8 per cent.

An official said that the government’s high expenditure was also one of the main reasons for higher monetary growth. He said that despite record high collection of revenues by the CBR, the government was involved in borrowing more and more for budgetary support.

Analysts said that monitory growth was rising without support from the private sector where the credit flows substantially declined. They said the low supply of credit had resulted into slow growth in manufacturing sector and the growth target of this sector looks difficult to achieve.