Pakistan posts highest-ever annual inflation; stampedes for food kill 16

In March, Pakistan saw record-breaking consumer price inflation of 35.37% from a year earlier, due to food, beverage, and transport prices surging up to 50% year-on-year, according to the statistics bureau. This figure outstrips February’s 31.5% inflation rate. March also saw stampedes for food aid, resulting in 16 deaths. Thousands of people have been gathering at flour distribution centres set up around the country; some were organised through a government programme to alleviate the effects of the inflation. However, at these centres, people have looted thousands of bags of flour and caused dangers through stampedes – this has affected even women and children who have been among the dead. The record figure for inflation is the highest year-on-year increase recorded by the bureau since monthly records began in the 1970s.

Food inflation in March rose 47.1% for urban areas and 50.2% for rural areas year-on-year, according to the statistics bureau. Core inflation, which strips out food and energy, stood at 18.6% in urban areas and 23.1% in rural areas. This comes at a time when the South Asian nation has been in economic turmoil for months, suffering from an acute balance of payments crisis. Despite Pakistan’s talks with the International Monetary Fund (IMF) for securing $1.1 billion in funding as part of a $6.5 billion bailout agreed in 2019, there have been no concrete developments. Pakistan’s foreign exchange reserves now cover barely four weeks of imports.

The March report for Pakistan projects that inflation will continue to remain high, citing market frictions caused by relative demand and supply gaps of essential items, exchange rate depreciation, and the recent upward adjustment in fuel prices as reasons behind higher inflation expectations.

Reporting by Asif Shahzad; Additional Reporting by Ariba Shahid in Karachi; Editing by William Mallard and Raju Gopalakrishnan.

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