- May 3, 2023
Pakistan’s Inflation Rate in April Highest in Five Decades, Outpaces Sri Lanka
Last Updated: May 03, 2023, 12:34 IST
A cost-of-living crisis and inflation are eating into the lives of Pakistani citizens as the government awaits the release of a suspended IMF bailout package. (Representational image: Reuters)
Pakistani currency is one of the worst-performing currencies globally in 2023 as it declined by 20 percent against the dollar
Pakistan has become the top country in Asia with the fastest inflation overtaking Sri Lanka as the value of the Pakistani rupee plummeted to low levels and food and energy prices reached record highs.
Consumer prices rose by 36.4 percent in April from a year earlier, a record highest in five decades, according to Bloomberg.
Islamabad’s inflation rate is the highest in Asia and up from March’s 35.4 percent.
The report said that Pakistan’s inflation outpaced price gains in Sri Lanka which is at 35.3 percent in April. Colombo has started to show signs of recovery from an economic crisis.
The Pakistani currency is one of the worst-performing currencies globally in 2023 as it declined by 20 percent against the dollar making imported goods more expensive.
The transport prices climbed 56.8 percent while the food inflation reached 48.1 percent in April from a year earlier. Meanwhile, the price of clothing and footwear has risen 21.6 percent and the cost of housing, water and electricity has risen by 16.9 percent. Pakistan’s rural areas recorded food inflation of 40.2 percent.
The prices of all essential commodities including food, medicine, transportation and electricity have massively gone up. Shortage of food items and fuel has only added to this crisis. Pakistan imports most of these items but the country is facing a huge cash crunch; and a food crisis, seen in some parts of the country so far, may stay longer and affect more areas.
The inflation is expected to increase further after the authorities raised the taxes and fuel prices to meet IMF’s conditions for the revival of the $6.5 billion loan program.
Pakistan’s finance ministry has said that the inflation was expected to remain at elevated levels in the coming months, despite contractionary monetary policy by the central bank.
Pakistan has been in economic turmoil for several months with an acute balance of payments crisis while talks with the IMF to secure $1.1 billion as part of a $6.5 billion bailout have not been successful.
Pakistan’s current GDP and per capita income are the lowest in its neighbourhood and only war-torn Afghanistan’s economy is weaker. The unemployment and inflation rates are one of the highest in the region.
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