The Ministry of Finance warned on Wednesday that the increase in government-mandated gasoline and energy prices would have a negative effect on inflation, which might accelerate and reach 15.5 percent in June, the highest level in the previous 12 and a half years.
The monthly Economic Outlook provided by the finance ministry predicts that the year-over-year inflation would pick up in June and may stay between 14.5 percent and 15.5 percent.
The previous time the rate of inflation was noted was in December 2010, it was 15.5%. The rate of price growth could potentially outpace the finance ministry’s prediction, which was made two days before the Pakistan Bureau of Statistics (PBS) was set to reveal the official inflation rate.
The PBS, the nation’s data collection body, has recently been accused of underreporting the inflation rate for some basic food items, raising concerns about the veracity of official figures.
The government removed subsidies on fuel and energy items, according to the Ministry of Finance, in an effort to reduce the twin deficit.
The coalition administration raised the cost of gasoline from Rs. 150 per liter to Rs. 234 per liter. There is a risk that costs will go up, even more, starting in July.
According to the finance ministry, the recent increase in commodity prices, particularly those of food and energy, will also affect domestic pricing.
The conflict between Russia and Ukraine and the ensuing supply chain disruptions are causing the global economy to expand more slowly and experience strong inflationary pressures.
Due to the ongoing high inflation, the US Federal Reserve increased its benchmark interest rate by 0.75 percent, which is the highest increase since 1994.
However, there was some variation in the trajectory of global commodity prices in May 2022.
The finance ministry further stated that once global commodity prices began to fall and stabilize, the impact on inflation might lessen.
It stated that since September 2021, the annual inflation rate has been on the rise.
In June 2022, this acceleration is anticipated to continue, and it could get worse because of a sharp rise in energy prices.
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