Inflation in Pakistan hits record high for second month in a row

ISLAMABAD - According to the statistics bureau, Pakistan's annual inflation rate increased to 37.97% in May, breaking the previous month's record and aggravating the country's balance of payment issue and sovereign default risk.

The bureau stated that Pakistan's CPI was the highest ever recorded and the highest in South Asia in April, surpassing Sri Lanka, which reported annual inflation of 25.2% in May.

According to a statement, Pakistan's month-on-month increase in May was 1.58%. The increase was attributed to the cost of vegetables, pulses, wheat, wheat flour, rice, eggs, and poultry as well as fuel and petrol costs.

Since the government implemented difficult measures as part of the fiscal adjustments required by the International Monetary Fund (IMF) to release stalled funds, inflation has been on the rise.

The IMF's demands include the elimination of subsidies, an increase in energy costs, a market-based currency rate, and new taxes to raise additional funds for an additional budget.

Despite Islamabad's claims that it has complied with the requirements, the IMF has failed to deliver the $1.1 billion in funding that has been pending since November as part of the $6.5 billion Extended Fund Facility decided upon in 2019.

For Pakistan to access other bilateral and international funds, the funding is essential.