Inflation in Pakistan has broken a five-decade record and reached 31.5 percent. Read to know more about the situation as the nation battles the worsening economic crisis.
Pakistan inflation: Here’s what you need to know
Pakistan has been facing a high inflation rate, leading to economic challenges for the country. The inflation rate is the pace at which the general level of prices for goods and services rise, leading to a decrease in purchasing power. In January 2020, it reached a ten-year record high. However, in February 2023, it broke fifty-year-long records when the consumer price index reached 31.5 percent. Earlier in April 1975, the rate came close to February’s figures. However, it stood at 29 percent. The direct repercussion is going to reflect in the monetary policy committee (MPC) meeting, taking place on Thursday.
Effect of the ongoing and worsening economic crisis
With the current situation, Pakistan is the 17th most expensive country in the world and heading toward hyperinflation. In recent months, food and gas prices have reached new highs. The country’s import-based economy is unable to handle the devaluation of its currency. Additionally, Pakistan’s forex reserves are at an all-time low, adding to the crisis.
On the same day as the grim figures were released, Moody’s, the global credit rating agency degraded Pakistan’s local and foreign currency credits. “The decision to downgrade the ratings is driven by Moody’s assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating,” stated Moody’s. Moreover, it is most likely going to affect the government’s attempts at securing a $1 billion bailout package from the International Monetary Fund (IMF).
