Business | Economy
Pakistan inflation zooms to fastest pace in 30 years
Pakistan's inflation accelerated to a 30-year high in July, lending support to the central bank's decision to raise interest rates last month.
- Bloomberg
- Published: 23:59 August 12, 2008
Karachi: Pakistan's inflation accelerated to a 30-year high in July, lending support to the central bank's decision to raise interest rates last month.
Consumer prices in South Asia's second-largest economy jumped 24.33 per cent from a year earlier after soaring 21.53 per cent in June, the Federal Bureau of Statistics said in Islamabad today. Economists were expecting a 23.5 per cent gain.
"Rising fuel prices in the domestic market have been stoking inflation," said Farhan Rizvi, an economist at JS Global Capital Ltd. in Karachi.
"The trend is expected to continue going forward, and the inflation rate could be 24 per cent in August."
Meanwhile, the Pakistan rupee fell to a record low yesterday, hurt by the country's political turmoil and ailing economy, but the central bank will find it hard to defend the currency because of dwindling foreign reserves.
The rupee closed at a record low of around 73.70/80 against the dollar, two traders said. They said the rupee was last quoted at 73.72/79 and 73.75/80. It was the second consecutive day that the rupee closed at a record low.
Some analysts said the persistent fall was a sign of a start of a run on the currency, but the central bank would not have the money to buy and support the rupee because of shrinking foreign exchange reserves -- equivalent to less than three months of imports.
"There is not much they can do unless they have the reserves available," said Asif Ali Qureshi, the research head at Invisor Securities.
"The key for the government right now is to get foreign aid," he said.
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