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Business News/ News / World/  Pakistan inflation soars to 40%: Onion up 370% & Diesel up 108% | Full list here
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Pakistan inflation soars to 40%: Onion up 370% & Diesel up 108% | Full list here

Pak economic crisis: The central bank of Pakistan is all set to raise interest rates as early as this week in an off-cycle review.

Pakistan has recorded nearly 40% rise in inflation. (Reuters)Premium
Pakistan has recorded nearly 40% rise in inflation. (Reuters)

Crisis-hit Pakistan recorded a new high in inflation as it went to 41.54% on a year-on-year basis for the week ended on February 23, following a continued hike in prices of essential commodities. The previous week, the inflation was at 38.42% high in the country. 

The increase in prices is the highest annual rise since the week ending September 15, 2022, when the SPI inflation was 40.6%.

The week-on-week inflation also jumped to 2.89% from 0.17% a week ago. Of the 51 items tracked, the prices of 34 items increased, five items decreased, whereas those of 12 items remained unchanged.

The price of petrol has been moved up to 272 per litre after an increase of 22.20, to appease the International Monetary Fund (IMF) for unlocking the critical loan tranche, hours after unveiling a tax-loaded 'mini-budget'.

Check out items recorded a price hike below:

S.No.ItemsIncrease in %
1.Onions 372
2.Chicken 101.86
3.Diesel81.36
4.Eggs81.22
5.Tomatoes65.30
6.Rice Basmati Broken73.05
7.Pulse Gram56.93
8.Bread55.36
9.Bananas 67.68
10.Pulse Moong 67.98

Check out items recorded a price decrease below:

S.No.ItemsDecrease in %
1.Tomatoes65.30
2.Electricity for Q17.50
3.Chilly Powder7.42

Prime Minister Shehbaz Sharif-led Pakistan government has been trying to increase the country's foreign exchange reserves, which currently stand at $3.25 billion as of February 17. However, the delay in the revival of the $6.5 billion International Monetary Fund (IMF) program has made it difficult for the government to achieve this goal. 

The country has been tweaking its financial policies to get the IMF deal with the introduction of a mini-budget, according to which, sales tax has now been increased to 25% and a rise in excise duty for foreign travel. 

In addition, the central bank of Pakistan is all set to raise interest rates as early as this week in an off-cycle review, investors said, as the South Asian nation faces pressure to mend its finances while seeking a $1 billion loan from IMF, according to Reuters. 

Market participants are expecting at least a 200 basis point increase in the central bank's policy rate, which stands at 17%. The expected increase is based on rates the Pakistan government set in the auction to raise domestic debt.

The government raised 258 billion rupees ($991.54 million) in the auction on Wednesday. The cut-off rates for the three-month, six-month, and 12-month tenors jumped 195 bps, 206 bps, and 184 bps higher than the previous auction.

The next meeting of the central bank's monetary policy committee is scheduled for March 16.  

Meanwhile, Pakistan has received a deposit of $700 million from the China Development Bank. The country is also looking to refinance two more commercial loans worth $500 million and $800 million. In total, Pakistan is aiming to refinance Chinese loans up to $2 billion by the end of February or the first week of March 2023.

This deposit from China is expected to ease some of the pressure on Pakistan's economy, which has been struggling due to the pandemic and external debt.

 

(With inputs from agencies)

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Published: 25 Feb 2023, 10:16 AM IST
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