KARACHI, June 24(ABC): Inflation, based on the consumer price index (CPI), is expected to soar to over a decade high in June owing to sky-high food and energy prices and massive currency devaluation, reported 0n Friday.
Analysts and financial pundits reinforced expectations that the State Bank of Pakistan (SBP) will raise its key interest rate for the sixth consecutive time in its next Monetary Policy Committee meeting scheduled to be held on July 7.
They suggested monthly inflation will rise to the range of 18.1-19.5% in June on an annual basis, from 13.8% in May. That would be the highest reading since 2009.
Elaborating further, analysts said that the June CPI is expected to rise almost by 20% based on recent changes in prices of fuel and other commodities and “the current situation has been compared with the 2008 situation following the global financial crisis”.
The government twice slashed unfunded fuel subsidies to control fiscal deficit and secure the International Monetary Fund (IMF) bailout programme since the last week of May. It raised petroleum product prices by Rs60/litre and also increased electricity tariffs.
The government has so far passed on the subsidy burden to the masses by announcing more than Rs84/litre (56%) increase in petrol prices and a Rs119/litre (82%) increase in HSD prices in almost four weeks.
The SBP has cumulatively increased the policy rate by 675 basis points (bps) during last year and by 400 bps in 2022 to date. This was the highest policy rate increase after 2008 when the policy rate was raised by 500 bps in a calendar year.
