Battling a worsening economic crisis, Pakistan’s inflation broke all previous records when the consumer price index reached 31.5 per cent in February, according to fresh readings issued by the Pakistan Bureau of Statistics (PBS).

The direct repercussion of high inflation rate will be seen in the monetary policy committee (MPC) meeting, scheduled to take place on Thursday. The committee, for all practical purposes, will be hiking interest rates, according to the experts. 

Since data-keeping began in July 1965, this is the first time inflation has crossed the threshold of 31.5 per cent in Pakistan. In April 1975, the inflation rate came close to February’s figures but stood still at 29 per cent. 

The south Asian country has now become the 17th most expensive country in the world and is hurriedly moving towards hyperinflation. Meaning, the value of the Pakistan Rupee has declined to such an extent that ordinary people and their purchasing power have plummeted. 

Food and gas prices have touched new highs in recent months as Pakistan’s import-based economy cannot handle the devaluation of its local currency. Additionally, the forex reserves are running at an all-time low which has added to the conundrum. 

The release of the grim figures came on the same day as global credit rating agency Moody’s, in its report, downgraded Pakistan’s local and foreign currency credit ratings from Caa1 to Caa3. 

“The decision to downgrade the ratings is driven by Moody’s assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating,” the agency said. 

The rating is expected to hurt the position of the Pakistani government which is currently involved in talks with the International Monetary Fund (IMF) to secure a $1 billion bailout package. 

To secure IMF funding, the Pakistani government has implemented new tax measures as suggested by the global body. However, securing the final tranche of payment looks uncertain at the moment. 

(With inputs from agencies) 


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