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Pakistan took the crown of Asia’s fastest inflation from Sri Lanka as a weak currency and rising food and energy costs pushed prices to record highs in April.
Economic crisis in Pakistan: A woman checks rice prices at a major wholesale market in Karachi. (AFP)
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Consumer prices rose 36.4 percent year-on-year in April, the highest level since 1964, data from the statistics department showed on Tuesday. That compares with a median estimate in a Bloomberg survey of 37.2 percent growth and a 35.4 percent rise in March.
Inflation in Pakistan outpaced price gains in Sri Lanka, which eased to 35.3% in April and started to show signs of recovery from the economic crisis, data showed. The Pakistani rupee is one of the world’s worst-performing currencies so far in 2023, losing 20% of its value against the dollar and making imports more expensive.
Transportation prices rose 56.8 percent in April, while food prices rose 48.1 percent year-on-year, the data showed. Clothing and footwear prices rose 21.6%, housing, utilities rose 16.9%.
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Inflation in Pakistan is expected to rise further after authorities raised taxes and fuel prices to meet the conditions of the International Monetary Fund’s resumption of a $6.5 billion loan program.
The bailout money is crucial to help Pakistan pay for essential imports such as food and fuel and avoid a default next month. However, the IMF is seeking financing guarantees before restarting aid.
To curb price pressures, the State Bank of Pakistan last month raised its benchmark interest rate to 21%, the highest level since central bank data began in 1956. Rising inflation is likely to keep borrowing costs up for the South Asian country, which is struggling to recover from sluggish economic growth after last year’s floods.
The central bank’s next monetary policy review will be on June 12.
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High oil prices have added further pressure on Prime Minister Sheikh Baz Sharif, who is also dealing with a political crisis. His rival Imran Khan is seeking snap elections and has threatened to return to street protests if his demands are not met.
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