New data from the nation’s statistics bureau indicates that Pakistan’s annual inflation rate surged to 31.4% in the month of September, up from the 27.4% recorded in August. This alarming increase is primarily attributed to the country grappling with soaring fuel and energy prices.
Pakistan is currently navigating a challenging path toward economic recovery, led by a caretaker government. This recovery was made possible by a $3 billion loan program approved by the International Monetary Fund (IMF) back in July, which prevented the nation from defaulting on its sovereign debt. However, the conditions attached to this loan have complicated the efforts to rein in inflation.
Breaking down the data further, on a month-to-month basis, inflation increased by 2% in September, compared to a 1.7% rise in August. The IMF-mandated reforms, including the relaxation of import restrictions and the removal of subsidies, have played a significant role in driving up annual inflation, which reached an all-time high of 38% in May.
Food inflation remains a concerning issue, with a persistently high rate of 33.1%. This is driven by a year-on-year increase in non-perishable food items at 38.4% and perishable food items at 4.37%.
Urban and rural areas have both experienced substantial year-on-year increases in annual consumer inflation, with rates standing at 29.7% for urban areas and 33.9% for rural areas.
Furthermore, specific categories have witnessed staggering year-on-year increases:
The nation’s interest rates have reached an unprecedented high of 22%, while the Pakistani rupee experienced record lows in August before a partial recovery in September, thanks to measures taken to curb unregulated foreign exchange trading.
In its most recent monthly report, the Ministry of Finance predicts that inflation will continue to remain elevated in the coming month, hovering around 29-31%. This is largely due to the upward adjustments in energy tariffs and substantial increases in fuel prices. However, there is an expectation that inflation will gradually ease, particularly in the second half of the upcoming fiscal year starting on January 1.