ISLAMABAD: Pakistan's annual inflation, measured by the consumer price index (CPI), rose to 24.5 percent in December on a year-on-year basis, the country’s statistics bureau said on Monday, with experts saying it could go further up once the country receives the much-awaited loan tranche from the International Monetary Fund (IMF).
Persistently high inflation has put a severe strain on the South Asian economy, already reeling from a balance-of-payment crisis, dwindling forex reserves and currency depreciation.
On Monday, the Pakistan Bureau of Statistics (PBS) said in a statement that the overall prices were up 0.5 percent in December on a month-on-month basis.
“CPI inflation (general) increased to 24.5% on a year-on-year basis in Dec. 2022 as compared to an increase of 23.8% in the previous month and 12.3% in Dec. 2021”, the bureau said in the statement.
“On [a] month-on-month basis, it increased to 0.5% in Dec. 2022 as compared to an increase of 0.8% in the previous month and with no change in Dec. 2021.”
With the foreign exchange reserves plummeting to $5.8 billion in December — barely enough for a month of imports — the South Asian country faces the specter of a default on its international financial obligations and desperately awaits external financing.
An IMF review of Pakistan's $7 billion loan program, secured in 2019, is pending since September. Once approved, the global money lender will provide over $1.1 billion to the cash-strapped nation.
Financial experts believe inflation will further increase once the country receives another tranche from the IMF and implements the lender’s conditions.
“The food price hike of 35.5% played a major contribution to the overall inflation during the month of December [and] inflation has been witnessed across the board,” Tahir Abbas, a research head at the Karachi-based Arif Habib Limited brokerage firm, told Arab News.
“The inflation may increase to around 27% if the government implements IMF conditions by raising electricity and gas tariff, and determines market-based currency exchange rate.”
Abbas said the country needed to take these measures for the continuity of the IMF program and had “no other option in hand.”
