Bad news for Pakistan and also for neighbouring countries.
Consumer prices up 12.5%.
Food prices up 25.5%
Prices of pulses (beans and peas) up 50 percent since January alone.
Average edible oil prices have up 16 percent since January.
Price of rice up 26 since January.
Interest rates rising to 10.5%
UN estimates 77 million Pakistans lack secure access to sufficient food.
Trade defcit widened by over $1 billion because of rising oil prices.
And in the middle of all this, instead of urgently trying to make plan to curb this inflation, instead of trying to implement policies to better support our agricultural sector and curb food smuggling… our fat, wealthy, politicians are continuing to haggle over a bunch of judges and making threats of bringing down the government which will do nothing bu paralyze rule and make remedial action even harder.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aWN_enU6m9Io
Pakistan’s inflation accelerated at the fastest pace in at least 25 years in April because of surging food and fuel prices, straining a six-week-old coalition government already on the brink of collapse.
Consumer prices jumped 17.21 percent from a year earlier after gaining 14.1 percent in March, the Federal Bureau of Statistics said in a statement in Islamabad today.
Finance Minister Ishaq Dar said on May 4 that soaring oil and food prices are undermining the fight against poverty. Pakistan’s ability to rein in prices may be hampered as Nawaz Sharif’s party said it may quit the coalition led by the Pakistan Peoples Party today.
If the trend continues, it will cause serious concerns to the new government,'' said Farhan Rizvi, an economist at JS Global. Oil prices have added to already high food prices, which directly hit the masses.‘’
Oil at more than $125 a barrel and declining wheat production are straining state finances as food and fuel are subsidized in the nation of 160 million people. Hundreds of people queue for hours outside state-run shops to buy the subsidized wheat flour and other essential goods across the nation.
Food prices in April rose 25.5 percent from a year ago and fuel prices climbed 8.6 percent, according to the data. Historical inflation data is compiled by JS Global Capital Ltd. in Karachi. The statistics bureau doesn’t have data preceding the year 2000.
Pakistan’s key stock index rose 0.4 percent to 14,286.61 at the 2:15 p.m. local time close today, after falling 4.9 percent last week, the biggest weekly decline in almost nine months. The rupee, rose 1 percent to 69 today, after losing 6.8 percent last week, the most since 1998.
Almost half the population of Pakistan, the world’s seventh- most-populous nation, faces difficulty gaining access to affordable food because of the soaring cost of cereals, a World Food Program spokesman Paul Risley said on April 23.
The Rome-based United Nations agency increased its estimate of the number of so-called food insecure people in Pakistan to 77 million from 60 million.
The nation may import more than 1.5 million metric tons of wheat this year to ease the shortage, farm minister Chaudhry Nisar Ali said on April 24.
The average price of pulses has risen about 50 percent since January, said Fareed Qureshi, chairman of the Karachi Retail Market Association. Average edible oil prices have climbed 16 percent since the start of the year and rice is 26 percent more costly than it was on Jan. 1, he said.
``Pakistan’s prices of wheat, flour, edible oil and pulses are at a record now,‘’ Qureshi said.
Pakistan, which imports about 85 percent of the oil it uses, increased prices of gasoline for the first time in more than 22 months on Feb. 29 after record crude prices increased import costs for the nation’s refiners. Oil & Gas Regulatory Authority, the regulator, has since raised prices three more times.
The trade deficit widened to $2.3 billion in April from $1.1 billion because of the rising oil import bill, the Bureau of Statistics said on May 10.
The central bank increased its benchmark interest rate for a second straight meeting on Jan. 31 to tame inflation. The discount rate for commercial lenders was raised half a percentage point to 10.5 percent for the six months ending June 30. Inflation may exceed the government’s target of 6.5 percent this year, curbing economic growth, the central bank said on March 31.
The inflation is paced mainly by food and oil prices,'' said Suleman Akhtar, an economist at Foundation Securities in Karachi. In current conditions, a rise in interest rates would not do much.‘’
Rising commodity prices are also stoking inflation in neighboring India and China. Prices in China accelerated to near the fastest in more than 11 years, the government said today, while inflation in India is at a 3 1/2 year high.
Pakistan’s consumer prices may jump as much as 9 percent this fiscal year ending June 30, exceeding the target of 6.5 percent, the central bank estimates. Annual inflation may reach 12.5 percent, said JS Global’s Rizvi.
Sharif, who leads a faction of the Pakistan Muslim League, the second-largest party in parliament, may withdraw from the PPP-led government because of a dispute over sacked judges.
Leaders of the Muslim League will meet today in Islamabad, after the former prime minister held three days of talks in London with Asif Ali Zardari, the co-chairman of the PPP, the main party in the coalition.
``The talks have not moved forward because of a deadlock caused by the PPP,‘’ Siddique-ul-Farooq, a spokesman for the Muslim League, said late yesterday.