2 May: Pakistan’s inflation rate has soared to 35.4 per cent in March 2023, the highest annual rise in prices on record since 1965, according to official data. The country has surpassed Sri Lanka, which defaulted on its debt for the first time in May 2022, as the fastest inflating economy in Asia.
The Consumer Price Index (CPI)-based inflation was driven mainly by skyrocketing costs of food, electricity, beverage, and transport. The prices of some food items, such as onions, tea, wheat, eggs, and rice increased by more than 80 per cent compared to March last year.
The inflation rate has stayed above 20 per cent for eight months from June 2022 to January 2023 and has crossed 35 per cent in March. The March inflation number was the highest annual rate since available data, i.e. July 1965, according to the research firm Arif Habib Ltd.
The high inflation has eroded the purchasing power of the poor citizens, who are already suffering from political instability, financial mismanagement, rupee depreciation, and International Monetary Fund (IMF) conditions to unlock a desperately needed bailout.
Pakistan’s year-on-year inflation hit 35.37 per cent in March – the highest in nearly five decades – as the government scrambled to meet International Monetary Fund (IMF) conditions to unlock a desperately needed bailout.
Experts have warned that Pakistan may face a debt default in the coming months if it fails to secure more loans or grants from friendly countries or international lenders. Pakistan’s public debt stood at 94.6 per cent of GDP as of June 2022.
Pakistan’s economic crisis has been compared to that of Sri Lanka, which defaulted on its debt for the first time in its history in May 2022. Sri Lanka’s inflation rate was 28.9 per cent in February 2023, according to its central bank.
However, some analysts have argued that Pakistan’s situation is more precarious than Sri Lanka’s due to its geostrategic vulnerabilities and the risk of turning into another Taliban-type regime.