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Pakistan's June inflation surges to highest in over a decade

Pakistan's June inflation surges to highest in over a decade

FILE PHOTO: A man arranges cauliflowers for sale on his wheelbarrow at a vegetable market in Islamabad, Pakistan January 29, 2018. REUTERS/Faisal Mahmood

KARACHI: Pakistan's consumer price index (CPI) rose 21.3 per cent in June from a year earlier, the statistics bureau said on Friday (Jul 1), for the South Asian nation's highest inflation in 13 years.

In May, the CPI was up 13.8 per cent on the year. The month-on-month rise in June was 6.3 per cent.

The spike comes as fuel prices have risen about 90 per cent since end May, after the government scrapped costly fuel subsidies in a bid to cut its surging fiscal deficit and secure a resumption of an IMF bailout programme.

Transport saw the biggest rise, with its index rising 62.2 per cent in June on the year.

The price index for food items, which make up about a third of the CPI basket, rose 25.9 per cent.

Pakistan has been struggling with high inflation for the last few months. The CPI index rose 12.1 per cent for the financial year 2021-22, which ended in June, compared with 8.9 per cent in the last financial year.

Despite rising global oil prices, subsidies for fuel and power were adopted in March 2022 by the government of previous Prime Minister Imran Khan, as he faced mounting discontent over his handling of the economy and rising inflation.

He was ousted in April, and the new government began reversing the costly subsidy, which it brought on par with international prices late last month.

Prices of fuel were hiked further on Thursday, with the cash-strapped government imposing a petroleum levy in its battle to reduce the fiscal deficit.

The levy, which officials expect to rise even further, was part of fiscal consolidation measures agreed with the IMF to resume the bailout programme.

Adding to Pakistan's inflation woes has been the weakening of the rupee against the dollar.

Source: Reuters/gs

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