Pakistan sees easing prices in January influenced by record-high interest rates

February 02, 2024 (MLN): Pakistan’s inflation pace eased in January as record-high interest rates had a greater impact on living costs fueled by higher energy prices and a weaker currency, as Bloomberg reported.

Consumer prices rose 28.34% from a year ago, according to data released by the Pakistan Bureau of Statistics on Thursday. 

Pakistan’s central bank this week kept borrowing costs at a record for a fifth consecutive meeting to curb inflation, which remains Asia’s fastest, in an attempt to temper living costs.

However, the caretaker government has been raising energy prices as part of its pledge to meet the International Monetary Fund’s loan conditions.

Soaring living costs are major issue for next week’s elections with political leaders promising to bring down inflation to as low as 4% should they be given a chance to form government.

 The central bank last month raised the average inflation forecast to 23%-25% in the fiscal year ending June from 20%-22% earlier and officials expect a decline in price gains from March.

The weak local currency, the worst performer last year in Asia, has boosted commodity prices although the central bank expects this decline to show up more noticeably after June this year.

The Finance Ministry expects gains in commodity costs to moderate between 27.5% and 28.5% last month.

Just before the release of January inflation data, the interim government raised gasoline prices by 5.2% to 272.89 rupees ($0.98) a liter until February 15.

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