Islamabad: According to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday, monthly inflation has reached an all-time high amid the country’s ongoing economic turmoil, which is making citizens’ lives miserable. The Consumer Price Index (CPI), a gauge of inflation, registered 36.4% year over year in April.
In April 2022, it was 13.4%, and last month it was 35.4%. Data available since 1965 indicate that this is the highest inflation ever, according to Arif Habib Limited. In the meantime, monthly inflation increased by 2.4%. Bloomberg claims that Pakistan is Asia’s country with the fastest-rising prices, surpassing even Sri Lanka, where inflation for the previous month was 35.3%.
An economist at Arif Habib Limited named Sana Tawfiq said the headline inflation was in line with forecasts. According to her, the price of fruits, vegetables, and wheat increased food inflation. In the meantime, the sub-indices for food, clothing, household goods, and recreation were the main drivers of month-over-month inflation. She said that the decrease in electricity prices was causing a drop in housing. The high-base effect would begin to take effect in the second half of the current year, the economist predicted, and inflation would start to decline. “Weaker currencies, rising international commodity prices, and rising food prices are risks associated with overall inflation.”
Pakistan’s inflation has been elevated for months as the economic crisis worsened, the rupee depreciated sharply and devastating floods during last year’s monsoon season destroyed crops. The situation was exacerbated by the huge drop in the country’s foreign exchange reserves that left it with less than a month’s import cover.
The Pakistani rupee has been one of the world’s worst-performing currencies this year, depreciating 20% against the US dollar. This has made imports, including food and fuel, much more expensive while the country desperately looks for ways to finance its balance-of-payments deficit.
The government has been in talks with the International Monetary Fund (IMF) for months to revive a stalled loan programme that would disburse over $1 billion as well as unlock funding from other multilateral institutions and friendly countries.
Measures taken by the government to revive the loan programme, including increasing taxes, removing subsidies and hiking the benchmark interest rate to a record high of 21%, have also contributed to elevated inflation levels.
