Pakistan took the crown for Asia’s fastest inflation from Sri Lanka as a weaker currency and rising food and energy costs drove price gains to a record in April.
Consumer prices rose 36.4% in April from a year earlier, the highest since 1964, according to data released by the statistics department Tuesday. That compares with a median estimate for a 37.2% gain in a Bloomberg survey and a 35.4% increase in March.
“The higher reading was expected over the hyperinflation in the food segment,” said AmreenSoorani, head of research at investment company JS Capital.
“While the trend may continue for a couple of months more, the base effect is likely to kick in from June 2023, slowing the pace.”
Rural areas were hit hardest, with food inflation reaching 40.2%. Meanwhile, the food inflation rate for both rural and urban areas hit 48.1%, the highest rate since 2016 when the bureau began recording these categories separately
The finance ministry warned that the country’s headline inflation rate will remain at elevated levels in the coming months, despite the central bank’s contractionary monetary policies.
The measures taken to secure a $6.5 billion bailout from the International Monetary Fund, including removing caps on the exchange rate, raising taxes, removing subsidies, and increasing key interest rates to a record high of 21%, have not yet been successful.
The finance ministry believes that the successful completion of talks with the IMF will eventually attract more capital inflows, stabilize the exchange rate, and alleviate inflationary pressures. However, this may take some time.
Increased Inflation in Different Sectors
- Food inflation increased steeply to 52.2% in rural areas and 46.8% in cities last month.
- Wheat flour and wheat saw a surge in prices by 107% and 103%, respectively.
- Inflation rate for transport, recreation and culture, beverages and tobacco, and perishable food groups were 56%, 69%, 134%, and 27%, respectively.
- Non-perishable food products’ inflation rate surged 49% last month.
- The prices of pulses increased by 58% and milk prices increased 40%.
- Non-food inflation rate increased to 25% in cities and 30% in rural areas.
- Electricity prices were higher by 31% and gas by 63% compared to a year ago.
- Petrol was expensive by 76% compared to a year ago.
- Cost of textbooks increased by 106% to 126% across the country and stationary became too expensive by 84%.
