State Bank of Pakistan says inflation in country to stay high for a year

Islamabad [Pakistan], July 8 (ANI): Inflation in the country will remain in the range of 18-20 per cent this fiscal year, according to the State Bank of Pakistan (SBP).
Dawn newspaper reported that the central bank had hiked its benchmark interest rate to the highest level since 2008 on Thursday, raising the borrowing cost by 125 basis points (bps) to 15 per cent amid multi-year high inflation.
“This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment,” the SBP said in a statement.
“It should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to rupee in the wake of multi-year high inflation and record imports,” the statement cited by the newspaper said.
The increase in domestic consumer prices is affecting the income of the people by limiting the spending power of consumers and investors, local media reported.
In May, Pakistan’s Bureau of Statistics (PBS) stated that the inflation rate as measured by the Consumer Price Index (CPI) was 13.76 per cent. The inflation increased by 6.34 per cent month-on-month (MoM) and reached 21.32 per cent year-on-year (YoY) in June, reported the Dawn
Earlier, the highest inflation stood at 23.3 per cent in December 2008.
Meanwhile, the education sector reported a single digit inflation of 9.46 per cent, and the communication sector reported an inflation of 1.96 per cent, Dawn reported citing PBS.
Motor fuel, liquefied hydrocarbons and electricity charges recorded 95 per cent increase in year-on-year inflation, as per the data.
Earlier, Pakistan’s finance ministry predicted the inflation rates to go beyond 15 per cent in the upcoming fiscal year, local media reported.
The Economic Adviser’s Wing (EAW) Monthly Economic Update for June & Outlook had said, “Despite achieving the growth of 5.97pc in FY2022, the underlying macroeconomic imbalances associated with domestic and international risks are making growth outlook indistinct.”
The EAW also said that the demand management policy of State Bank of Pakistan (SBP) might be unsuccessful because of the constraints in supply and higher international commodity prices, adding that the policy might further reduce income levels. (ANI)