Pakistan inflation stalls high in August despite IMF bailout

Pakistan’s headline inflation persisted at 27.4 per cent year-on-year in August, official data showed, as a tumbling rupee and soaring bills blamed on an IMF bailout package hampered government efforts to rein in prices.

Pakistan was on the brink of default this summer, before the International Monetary Fund agreed to a lifeline deal on condition that the government cut subsidies that had cushioned living costs.

Since then, the rupee has crossed an historic threshold of 300 to the dollar, whilst Islamabad has hiked petrol prices and electricity costs have spiked, sowing widespread discontent.

Prices rose 1.7 per cent month-on-month in August, according to government statistics released Friday, and the year-on-year figure of 27.4 per cent was only one point shy of July’s, signalling little relief.

In August, motor fuel cost eight per cent more than July, whilst water bills in urban areas rose more than 11 per cent and the price of tomatoes was up as much as 82 per cent.

Trade deficit worsens: Compared to July, Pakistan’s import bill has reached $4.5 billion in August registering an increase of 21 per cent.

As the volume of imports has increased, the trade deficit has also worsened to $2.13 billion registering an increase of 30%. According to data released by the Pakistan Bureau of Statistics, compared to July 2023, the exports registered an increase of 14.30% on Month-on-Month in August.

Meanwhile, compared to August 2022, exports decreased by 4.83% Year-on-Year and stood at $2.36 billion.

On mum, exports in August 2023 increased to $2.36 billion compared to $2.07 billion in July 2023.

Meanwhile, the imports increased by 21.2% mum in August 2023 and stood at $4.49 billion compared to imports which stood at $3.71 billion in July 2023.

On YoY, the imports registered a decrease of 26% and stood at $4.49 billion as compared to August 2022 in which imports stood at $6.1 billion.

According to the data, exports decreased by 6.4% to $4.43 billion in 2MFY24, imports decreased by 25.7% to $8.19 billion in 2MFY24, and the trade deficit increased by 30% to $2.13 billion compared to July 2023.

On a cumulative basis, in 2MFY24, the trade deficit improved by 40.29% YoY to $3.76 billion as compared to $6.3bn in 2MFY23.

Solar Panels’ demand: Due to the recent surge in the electricity tariff, the demand for solar panels has increased in Karachi.

According to the details, the continued rise in the power tariff forces the power consumers to think of a cheap alternative.

In response to this escalating issue, many consumers are turning to solar energy as an affordable, eco-friendly, and readily accessible alternative due to which the demand for solar panels has increased in the metropolis.

The shopkeeper pointed out that the rising inflation has affected the purchasing power of citizens, on the other hand the rising exchange rate of the dollar against the PKR has also resulted a surge in the prices of solar panels.

As per the market survey, a single volt system costs around Rs 80,000 to Rs 100,000 while a 220 volt system costs Rs 200,000, similarly a system running a fridge, four fans and four lights is available for Rs 350,000 to Rs 400,000.

Last month, the National Electric Power Regulatory Authority (NEPRA) approved massive increase in the power tariff on account of quarterly adjustments.

According to details, the power regulatory authority sanctioned a rise of Rs5.40 per unit in electricity price on account of the fourth quarter adjustment for the fiscal year 2022-23.

The detailed verdict will be issued later on, the power authority said, adding that the lifeline, K-Electric consumers will be exempted from the recent power tariff hike.

The hike will put an extra burden on the power consumers who are already facing inflated power rates. Separately, the power authorities are likely to approve another hike in electricity tariff by Rs2.07 per unit in terms of July’s fuel charge adjustment (FCA).

Separately, the Islamabad Chamber of Commerce & Industry (ICCI) and the Intelligence Bureau Employee’s Cooperative Housing Society (IBECHS) have signed a Memorandum of Understanding for the establishment of a state-of-the-art Expo Centre in the Federal Capital. Ahsan Zafar Bakhtawari, President ICCI and Shujaat Ullah Qureshi, Secretary, IBECHS signed the MoU in a ceremony held in a local hotel.

Speaking on the occasion, Tariq Mehmood, President, Intelligence Bureau Employee’s Cooperative Housing Society said that by establishing an Expo Center in the Federal Capital, we would be discharging an important national responsibility. He said that the Expo Centre is the backbone of an economy and a joint venture between ICCI and IBECHS for this important project would go a long way in improving the economy.

Agencies