ISLAMABAD: Pakistan’s annual inflation rate accelerated to history’s highest-ever level of 38% in May due to supply shocks, currency devaluation and the absence of any checks on hoarding and profiteering.
As the general elections are due later this year, the ruling coalition would be hard-pressed to defend its policies as people are finding it hard to make both end meets.
The Pakistan Bureau of Statistics (PBS) — the national data collecting agency — on Thursday reported that the Consumer Price Index rose to 38% last month compared to a year ago. This was the highest-ever inflation reading in Pakistan, breaking all previous records and also beating the forecast of the Ministry of Finance by a big margin.
Inflation has embedded and the inflationary expectations remain high, Minister of State for Finance Dr Aisha Pasha admitted on Thursday in a parliamentary committee hearing. But she hoped that after the next fiscal year, the inflation rate would come down to a single digit.
For the next fiscal year, the government is going to set the inflation target at 21%, indicating that people will not see any relief in their present miserable situation.
People living in rural areas have been hit the most, as the average increase in the prices of goods and services that they used increased by 42.2% last month. The majority of the population still lives in rural areas.
The inflation rate jumped to 35.1% in the cities, according to the PBS. Politicians will have to face the brunt during the time of electioneering, said Khalid Magsi, the member of National Assembly from Balochistan.
The food inflation jumped to 52.4% in rural areas and it remained at 48.1% in cities, according to the PBS.
The global commodity prices, withdrawal of subsidies, increase in electricity, gas prices and the currency devaluation were the main reasons behind the higher inflation in Pakistan, said the minister of state for finance. She said the governments in Punjab and Khyber-Pakhtunkhwa were not doing enough to contain inflation.
One of the charges against the government of Pakistan Tehreek-e-Insaf was that it failed to contain inflation which, at the end of its tenure, was 13.4%.