by Agence France-PressePakistan’s year-on-year inflation hit a record 37.97 percent in May, official data showed on Thursday as the country teeters on the brink of economic collapse as crucial bailout talks stall.
Non-perishable food and transportation costs climbed more than 50 percent in May 2022, while the average inflation for the past 12 months stood at 29.16 percent, according to the latest Pakistan Bureau of Statistics data.
“This level of inflation badly affects the country’s poor and middle-class families, whose income is eroding with each percentage point,” said Mohammad Sohail, a financier in Karachi.
Years of financial mismanagement have pushed Pakistan’s economy to the limit, exacerbated by a global energy crisis and devastating floods that could submerge a third of the country in 2022.
A political crisis has added another layer of uncertainty – with the brief arrest last month of opposition leader Imran Khan accompanied by deadly street violence and a one-day state-ordered mobile internet blackout.
In the background, talks to unlock a key tranche of a $6.5 billion loan deal agreed with the International Monetary Fund have been deadlocked for months.
Pakistan needs billions of dollars in financing to meet staggering levels of external debt, and foreign exchange reserves have dwindled to just $4.2 billion, barely enough for a month’s imports.
Elections are due no later than October, and the government has already bowed to IMF demands to end popular subsidies on gas and electricity, which had undermined the cost-of-living crisis.
“Everyone is worried,” said Muhammad Safir, 42, at a market in Islamabad. “Where will we get the money? Personal debt can only go up.”
Prime Minister Shehbaz Sharif’s government is due to present its annual budget next week, and the nation has already slashed its growth forecast for the year ending June 30 to 0.3 percent from five percent.