January 04, 2024 (MLN): The headline inflation accelerated for the second straight month in December despite record borrowing costs, as International Monetary Fund-backed hikes in energy costs and a weak currency stoked price gains, Bloomberg reported.
Consumer prices rose 29.66% from a year ago, compared with a median estimate for a 29.05% gain in a Bloomberg survey and a reading of 29.23% in November.
The numbers are in contrast to expectations of the State Bank of Pakistan, which last month held its benchmark interest rate for a fourth straight meeting ahead of the International Monetary Fund’s nod for a $700 million loan payout.
The lenders' executive board will meet on January 11, 2024.
Pakistan’s currency dropped by 20% last year, making it one of the worst performers globally and adding pressure on consumer prices.
Moderation in international commodity prices is expected to lower Asia’s fastest inflation in the coming months, the central bank said in its review.
The finance ministry also estimated gains to moderate between 27.5% and 28.5% in December.
Authorities have raised taxes and energy costs to keep the IMF bailout on track, moves that have put more burden on consumers.
Ahead of national elections in February, the caretaker government cut retail gasoline prices by Rs64 ($0.23) a liter in the past three months to reflect global oil prices after raising rates in the last 12 months.
Transport prices jumped 28.6% in December from a year ago and food costs were 27.5% higher, official data showed. Housing, water, gas, and electricity prices increased by 37.68%.
