As supplies queue up at the ports, Pakistan’s inflation is at a 48-year high.
4 February 2023
After the cash-strapped government restricted imports, thousands of containers of food, raw materials,
and equipment became stranded in ports, causing Pakistan’s inflation to accelerate to its highest level
in over 48 years in January.
Data from the statistics department showed that consumer prices increased 27.55% from a year earlier.
Comparatively, a Bloomberg survey’s median expectation of a gain was 25.9%, while the December increase was 24.47%. According to figures from the central bank, inflation is at its highest level since May 1975.
The most recent reading was released a week after the State Bank of Pakistan raised its benchmark rate to the highest level in more than 24 years in an effort to stabilise an economy that is deepening its crisis due to a lack of supplies, sky-high prices, and a funding constraint. After last year’s catastrophic floods, which
exacerbated the effects of political unrest and the effects of the war in Ukraine, Pakistan’s problems grew worse.
As per Bloomberg Economics
It will likely continue to accelerate as the government scrambles to fulfill the International Monetary Fund’s aid conditions to secure much-needed dollars. We see inflation climbing in coming months on a combination of rupee depreciation and hikes in fuel prices and electricity tariffs. The government could raise additional taxes on the IMF’s insistence. This will likely push the State Bank of Pakistan to increase interest rates further. –Ankur Shukla, India economist
Approximately 6,000 containers, containing thousands of tonnes of supplies for poultry feed that drove chicken prices to an all-time high earlier this year, are stuck in ports. The bottleneck is making the inflation rate, which has been above 20% since June due to import restrictions set by the government because of financial scares.
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