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ISLAMABAD (Reuters) – Pakistan’s core inflation fell for the first time in seven months in June, figures released on Monday showed, a bright spot for the embattled government which must call elections this year.
The year-on-year inflation rate was 29.4% last month. Pakistan Statistics Bureau The data showed, compared with 38 percent in May.
Years of financial mismanagement have pushed Pakistan’s economy to its limits, exacerbated by the Covid pandemic, the global energy crisis and record floods that inundated a third of the country last year.
Pakistan sealed a $3 billion standby agreement with the International Monetary Fund on Friday, which could provide temporary relief to the country’s ballooning foreign debt.
To meet the requirements of the agreement – which will be considered by the IMF’s board by mid-July – Pakistan has removed popular gas and electricity subsidies, which have eased the cost of living crisis.
And with elections approaching in October, campaigning is likely to be fueled by promises of development and pledges to reform the economy.
The latest data shows that poor Pakistanis are still feeling the pinch of the economic turmoil.
Food prices increased by 40 percent from June 2022, while transportation costs increased by 20 percent in the same period.
Pakistan’s poverty rate is expected to reach 37.2 percent this year, according to a World Bank report released in April.
The rupee has fallen to record lows against the dollar this year, making imported goods more expensive.
The country’s central bank raised its benchmark interest rate to a record high of 22 percent at an emergency meeting last week.
Economist Ashfaq Hassan Khan, former private secretary at the Ministry of Finance, warned that the latest inflationary easing was likely to be only temporary.
“I fear that inflation will pick up in July as the state bank raised the interest rate and fixed it at 22 per cent.
“The (inflation) rate will also rise in the event of currency devaluation as a result of any understanding between the government and the International Monetary Fund,” he added.
economic Farroukh Salim He said that “temporary relief” should not distract from systemic issues.
“The main problem remains in the form of large loans from the government.
“This situation will continue to affect people indirectly because it will lead to an increase in poverty, inflation and unemployment in the country.”
Pakistan’s stock market rose more than three years in early trade on Monday, on the back of last week’s International Monetary Fund deal.
Pakistan failed to meet any economic growth targets for the 2022-23 fiscal year, with GDP growth of 0.3%.
Foreign exchange reserves dwindled to just $3.5 billion, roughly enough for three weeks of imports.
The year-on-year inflation rate was 29.4% last month. Pakistan Statistics Bureau The data showed, compared with 38 percent in May.
Years of financial mismanagement have pushed Pakistan’s economy to its limits, exacerbated by the Covid pandemic, the global energy crisis and record floods that inundated a third of the country last year.
Pakistan sealed a $3 billion standby agreement with the International Monetary Fund on Friday, which could provide temporary relief to the country’s ballooning foreign debt.
To meet the requirements of the agreement – which will be considered by the IMF’s board by mid-July – Pakistan has removed popular gas and electricity subsidies, which have eased the cost of living crisis.
And with elections approaching in October, campaigning is likely to be fueled by promises of development and pledges to reform the economy.
The latest data shows that poor Pakistanis are still feeling the pinch of the economic turmoil.
Food prices increased by 40 percent from June 2022, while transportation costs increased by 20 percent in the same period.
Pakistan’s poverty rate is expected to reach 37.2 percent this year, according to a World Bank report released in April.
The rupee has fallen to record lows against the dollar this year, making imported goods more expensive.
The country’s central bank raised its benchmark interest rate to a record high of 22 percent at an emergency meeting last week.
Economist Ashfaq Hassan Khan, former private secretary at the Ministry of Finance, warned that the latest inflationary easing was likely to be only temporary.
“I fear that inflation will pick up in July as the state bank raised the interest rate and fixed it at 22 per cent.
“The (inflation) rate will also rise in the event of currency devaluation as a result of any understanding between the government and the International Monetary Fund,” he added.
economic Farroukh Salim He said that “temporary relief” should not distract from systemic issues.
“The main problem remains in the form of large loans from the government.
“This situation will continue to affect people indirectly because it will lead to an increase in poverty, inflation and unemployment in the country.”
Pakistan’s stock market rose more than three years in early trade on Monday, on the back of last week’s International Monetary Fund deal.
Pakistan failed to meet any economic growth targets for the 2022-23 fiscal year, with GDP growth of 0.3%.
Foreign exchange reserves dwindled to just $3.5 billion, roughly enough for three weeks of imports.
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