Pakistan's economic woes worsen as inflation hits 28.5%

Amidst an eco-Anomic crisis, Pakistan's caretaker government has revised its inflation projection, anticipating a staggering 28.5% inflation rate for January. The revised estimate, a 3.5% increase from the previous month, reflects persistent challenges in the form of food supply shocks, as reported by The Express Tribune.

This revision follows the recent adjustment by the central bank, which raised its inflation forecast, tempering earlier optimism about a sharp decline in inflation in the second half of the fiscal year.

The State Bank of Pakistan attributes the failure to achieve inflation targets to frequent adjustments in administered energy prices, impacting the near-term outlook.

The finance ministry's flagship monthly economic outlook report highlights contributors to inflationary pressure, including elevated prices of perishables and vegetables, increased electricity and gas costs, and supply disruptions due to severe weather conditions. The surge in onion export orders, following an Indian ban, has strained local supply, while reduced chicken supply has impacted prices.

Despite these challenges, the government has implemented measures such as increasing the minimum export price for onions and lifting the ban on soybean imports to address supply issues for perishables and chicken. The report notes a slight moderation in the inflation outlook for January, attributed to a decline in fuel costs, providing a potential counterbalance to overall inflationary pressures.

The finance ministry acknowledges economic stabilization in the first half of the fiscal year, with a current account surplus in December.