Inflation has become a chronic problem for Pakistan’s economy. It is hard for a state to get out of the cycle of inflation once it is caught in it.
The Pakistani inflation rate increased from 24.5% in December to 27.6% in January 2023. After the cash-strapped government restricted imports, thousands of containers containing food, raw materials, and equipment are stuck in ports. This was the highest reading since May 1975. Food and non-alcoholic beverages (43%) and recreation and culture (44.1%) represent the primary upward pressures. housing and utilities, as well as hotels and restaurants (30.1%) Following a gain of 0.5 percent in the month before, consumer prices increased by 2.9% on a monthly basis, the highest rate in three months. In the meantime, on January 23, 2023, Pakistan’s central bank raised its policy interest rate by 100 basis points to 17%, the highest level since 1998, to help stabilize the economy in the face of a funding crunch, extremely high prices, and insufficient supply.
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