Pakistan inflation clocks to 13.76% in May, highest in two-and-half-year: Report

Pakistan’s inflation rate spiralled to 13.76 per cent in May, the highest in two-and-half-year.

Inflation has been high for a number of years now but the latest round owes in no small manner to Islamabad’s own peculiar decision-making process, reported Daily Times.

A few very impressive schemes of the previous Pakistan Tehreek-e-Insaf (PTI), led by Imran Khan, such as the health card, counted on large cash dole-outs from the government, put unnecessary pressure on reserves at a very critical time, increased the pressure to borrow more, and pushed prices to the upside.

Shaukat Tarin’s first budget as PTI’s Finance Minister, which suddenly departed from IMF prescription, contradicted SBP’s tight monetary policy and took a very expansionary fiscal position, also created false expectations and made investors lock deals that had to be rolled back when the mini-budget was presented, reported Daily Times.

And the decision to freeze petrol prices in February, for purely political considerations, inflated the current account deficit and also stalled the bailout program.

The new Pakistan Muslim League-Nawaz (PML-N) led Shehbaz Sharif government, too, did not help matters with its own paralysis. It delayed the decision to raise prices to prevent a political backlash, only to bow to the inevitable after losing precious time.