Inflation spikes to 31.4% in Pakistan

Web DeskOctober 2, 20233943 min

On a month-to-month basis, the Consumer Price Index (CPI)-based inflation rate for September increased by 2%, compared to the 1.7% rise in August, according to data.

Inflation surged to 31.4% year-on-year in September, up from 27.4% in August, as reported by the Pakistan Bureau of Statistics (PBS) on Monday. This increase in inflation can be attributed to the country grappling with elevated fuel and power prices.

Pakistan is facing significant economic challenges as it operates under a caretaker government, particularly after receiving a $3 billion loan from the International Monetary Fund (IMF) in July. While this loan prevented a sovereign default, the attached conditions have made it challenging for authorities to control inflation.

Read more:Government Predicts 31% Rise in Inflation

PBS data reveals that on a month-to-month basis, inflation climbed by 2% in September, compared to a 1.7% increase in August.

Annual inflation reached a historic high of 38% in May, primarily due to IMF-mandated reforms that included subsidy removal and the relaxation of import restrictions.

Benchmark interest rates have also reached their peak at 22%, and the national currency, the rupee, hit an all-time low against the dollar in August before recovering, thanks to a crackdown on illegal currency trading.

According to the Ministry of Finance’s monthly report, inflation is expected to remain elevated in the coming months, hovering around 29-31%, primarily due to rising petrol and energy prices. However, the report anticipates a gradual easing of inflation, especially in the second half of the current fiscal year starting on January 1.

Analysts are of the opinion that inflation has reached its zenith and anticipate a decline in the upcoming months.

The interim government has also reduced the prices of petroleum products, marking the first decrease since mid-July. This reduction is attributed to international petroleum product prices and an improvement in the exchange rate, following measures to curb unregulated forex trading.

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