Inflation which has already crossed 27% in Pakistan may touch a new high of 30% as skyrocketing prices of tomatoes, potatoes, and onions are putting food out of reach of Pakistanis, including flood-hit victims.
Analysts fear that such a situation may spur more tightening of monetary policy.
SBP keeps policy rate unchanged at 15pc
Pakistan, which has been reeling from dwindling currency reserves and the fastest inflation in almost five decades, faces a food shortage after monsoonal rains submerged a third of the country and destroyed crops. Eight more districts were added at the weekend to the country’s calamity list of 80 areas hit by floods.
The devastating floods have exacerbated food shortage and sent prices sky-high. Onions were sold at 300 rupees ($1.37) a kilo from 50 rupees before the floods. Dadu has seen the biggest damage to its rice and onion production.
The cost of potatoes also climbed four times to 100 rupees per kilo, tomatoes have gained 300% to be sold at 400 rupees per kilo, while ghee, soared by 400%.
Inflation soars past 27% in August; highest in 49 years
Elsewhere, supplies of dairy and meat have also been hit as warehouses got flooded.
The skyrocketing food prices will add more to the misery of the people and the fragile economy that has just been regaining some funding strength after securing a $1.16 billion International Monetary Fund bailout and $9 billion in pledges from Qatar, Saudi Arabia, and the UAE.
Pakistan receives $1.16 billion from IMF
The floods, which will cost an estimated $10 billion worth of damage, have so far claimed the lives of more than 1,300 people and forced half a million into camps. It’s also submerged large swathes of farmland and flushed away crops in a country where agriculture accounts for about a fifth of the economy.
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Finance Minister Miftah Ismail has said that in Sindh province, the entire cotton crop spanning 1.5 million acres, as well as 65% of the region’s rice output have been wiped out. The entire production of dates, 20% of sugarcane, and half of its onions and other vegetable crops have also been destroyed.
