The Pakistan Bureau of Statistics (PBS) said on Tuesday that annual inflation reached 36.4% in the year ending in April, the highest rate in South Asia and an increase from March’s 35.4%. This increase was driven primarily by food price increases.
According to Reuters, food prices rose by 40.2% in rural areas. Since FY16, when the bureau first began monitoring rural and urban food inflation separately, both categories have combined to reach 48.1%.
According to data released by the bureau, prices went up 2.4% month-over-month in April.
“The higher reading was expected over the hyperinflation in the food segment,” said Amreen Soorani, head of research at investment firm JS Capital.
“While the trend may continue for a couple of months more, the base effect is likely to kick in from June 2023, thereby slowing the pace.”
Finance ministry predicted that headline inflation would remain elevated
Despite the central bank’s contractionary monetary policy, the finance ministry predicted that headline inflation would remain elevated for the foreseeable future.
With an extreme balance of payments crisis that has persisted for months, Pakistan’s economy has been in disarray, and negotiations with the International Monetary Fund (IMF) to collect $1.1 billion as part of a $6.5bn bailout have failed.
In an effort to shore up the necessary funds, the government has taken steps like raising taxes, doing away with subsidies, and boosting key interest rates to a record high of 21 percent.
According to the finance ministry, the end of negotiations with the IMF will stabilise the exchange rate and reduce inflationary pressures.
Consistently rising inflation has caused significant modifications to people’s consumption patterns, as well as an increase in the demand for social services.
To read our article about “Gold prices in Pakistan as of today, May 3, 2023” click here.
