The fresh data released by the Pakistan Bureau of Statistics (PBS) on Monday revealed a sharp increase in the country’s inflation rate, reaching 31.4% year-on-year in September, up from 27.4% in August.
This surge has been attributed to soaring fuel and power prices, putting immense pressure on the nation’s economy.
Pakistan, currently under a caretaker government, is grappling with economic recovery after securing a crucial $3 billion loan from the International Monetary Fund (IMF) in July. While the loan helped avert a sovereign default, the associated conditions have made it challenging for authorities to curb inflation.
According to PBS figures, inflation rose by 2% on a month-on-month basis in September, compared to a 1.7% increase in August.
The country had already witnessed a historic high in annual inflation at 38% in May, a consequence of IMF-led reforms, including subsidy removals and relaxed import restrictions.
Amidst these economic challenges, Pakistan’s benchmark interest rates reached a record high of 22%. The national currency, the rupee, experienced an all-time low against the dollar in August before recovering due to a crackdown on illegal forex trading activities.
The Ministry of Finance, in its monthly report, anticipates inflation to hover around 29-31% in the upcoming months, primarily due to surging petrol and energy tariffs. However, the report also suggests a potential easing of inflation, especially in the second half of the current fiscal year beginning on January 1.
Financial analysts have expressed optimism, believing that inflation may have peaked and could gradually decrease in the coming months.
Additionally, the interim government recently implemented the first reduction in petroleum product prices since mid-July, citing international price trends and improvements in the exchange rate resulting from measures against unregulated forex trading.
The situation remains challenging, with the government and economic experts closely monitoring developments and strategizing to stabilize the nation’s economy amidst these turbulent times
