ISLAMABAD: Recording fiscal deficit during the first two months of the current fiscal year unchanged at 0.9 per cent of GDP, the finance ministry on Thursday warned that the exchange rate, commodity supplies and seasonality could intensify the magnitude of prices and transportation costs in the country.

“The effect of these impulses — surge in international oil prices, exchange rate depreciation and adjustments in administered prices — may intensify the magnitude of prices and transportation cost,” Economic Adviser’s Wing of the Ministry of Finance stated in its monthly Economic Update & Outlook.

The ministry said the country had seen the revival of economic activities but an unprecedented increase in international commodity prices was putting pressure on domestic prices as well as on the local currency. The government’s pro-growth initiative along with efficient monitoring of prices is expected to provide relief to the general public.

The ministry explained that the country’s inflation rate was mainly driven by monetary and supply side factors, including domestic and international commodity prices, dollar exchange rate, seasonal factors and economic agents’ expectations concerning the future developments of these indicators.