ISLAMABAD: Soaring food and oil prices drove inflation in Pakistan to its highest level in over 30 years in May, and analysts expect it to rise further as the government was expected to slash price subsidies in a budget to be announced later on Wednesday.
Official data on Wednesday showed the consumer price index rose 2.69 per cent in May to stand 19.27 per cent higher than a year earlier, after a 17.21 per cent year-on-year rise in April.
“There are two factors driving inflation, high food prices and the second is the base effect of passing the burden of oil prices,” said Asif Qureshi, head of research at Invisor Securities Ltd. Prices of food and beverages rose 28.48pc in May, while house rent and fuel and lighting increased by 12.05 per cent and 9.50 per cent, respectively.
Inflation is at its highest since 1975 when annual average prices rose 26.83 per cent. Analysts said monthly data started being released in 1991 and therefore it was difficult to make an exact comparison of inflation figures. Total budget subsidies on fuel oil, electricity, fertilisers and food items were due to be reduced to 295.20 billion rupees from 407.48 billion rupees.
Source: The News