Pakistan economic crisis: Retail prices of many household items surged sharply in the past week in Pakistan, driving the weekly inflation to over 40 per cent for the first time in over five months, the country's Dawn reported on Saturday. The items that saw a massive jump in prices were onions, chicken, eggs, rice, cigarettes, and fuel.
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According to the Pakistan Bureau of Statistics (PBS), bananas, chicken, sugar, cooking oil, gas, and cigarettes have also become costlier. Short-term inflation, measured by Sensitive Price Indicator (SPI), jumped to 41.54 per cent on a year-on-year basis for the week ended on Feb 23, rising from 38.42 per cent in the previous week, the report said.
The rise in prices is the highest since the week ending September 8, 2022, when the SPI inflation was 42.7 per cent. And it was above 40 per cent for the first time since September 15, when the reading was 40.58 per cent, Pakistan daily said.
Among the items whose prices jumped the most compared to the same week a year ago were onions (372 per cent), cigarettes (164.7 per cent), gas (108.38 per cent), and chicken (85.7 per cent). The prices of diesel rose 81.36 per cent, eggs 75.81 per cent, broken basmati rice 74.16 per cent, bananas 72.22 per cent, and petrol 69.87 per cent.
In the middle of an economic crisis, Pakistan is witnessing record inflation and many agencies have projected that it could average 33 per cent in the first half of 2023. The country's forex reserves have plummeted, affecting the imports of many items. The shortage of households has pushed the prices higher.
The Pakistan government led by Prime Minister Shehbaz Sharif and the country's central bank have been taking measures to raise revenue, cut costs, and arrest inflation. Earlier this week some reports emerged saying Pakistan’s central bank may hike interest rates by 200 basis points to cool down inflation.
Prime Minister Shehbaz Sharif has asked cabinet members to not fly in business class or stay in 5-star hotels during foreign trips. He has also asked ministers to surrender luxury vehicles that will be auctioned. Sharif's office recently asked the foreign ministry to prepare a plan to cut costs by 15 per cent and reduce the number of missions abroad.
Meanwhile, Murtaza Syed, a former acting and deputy governor of the country's central bank, told Bloomberg that Pakistan would need another IMF deal in June as it had to pay $10-$12 billion in the next six months. He also said that Pakistan needs debt relief otherwise the common people would suffer. Pakistan is required up to $35 billion for the next three years for debt servicing.