Pakistan tops Asia in inflation rates: Bloomberg report

WEB DESK: A recent report by Bloomberg has highlighted Pakistan as experiencing the highest inflation rate in its region. According to the American media outlet, the Pakistani government has been compelled to raise energy prices in order to secure a new programme with the International Monetary Fund (IMF).

The report indicates that while the inflation rate in Pakistan has decreased, the cost of electricity has risen to a point where it now exceeds household rent in many cases.

The increase in power tariffs, aimed at meeting IMF loan conditions and implementing necessary reforms, has triggered widespread protests across the country.

Bloomberg noted that electricity prices in Pakistan have surged by 155 per cent since 2021. This dramatic rise followed the government’s decision to increase both industrial and retail electricity rates to enhance the likelihood of obtaining IMF loans.

The energy sector’s challenges have exacerbated the country’s ongoing economic crisis. Inflation, which stands at around 12 per cent—the highest in Asia—has significantly diminished purchasing power, leading to a decrease in electricity consumption as people and businesses turn to solar energy.

In July, following the approval of a $7 billion IMF loan, the average electricity price for residential users increased by 18 per cent. Many residents are now facing electricity bills that surpass their monthly rent, which ranges from $100 to $700, according to Samiullah Tariq, head of research at Pakistan Kuwait Investment Co.

In response to the growing discontent, Prime Minister Shehbaz Sharif has announced a Rs50 billion ($180 million) subsidy over the next three months to help the poorest households manage the impact of rising energy costs.

The IMF programme aims to address the viability of Pakistan’s energy sector through cost reductions and the privatisation of state-owned power distribution companies. The power regulator reports that Pakistan loses approximately 16 per cent of its electricity due to theft and inefficiencies in transmission and distribution.

The Bloomberg report underscores the severity of Pakistan’s economic challenges and the critical need for sustainable solutions in its energy sector.

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