Pakistan Faces Rising Inflation After New Budget Announcement

Islamabad [Pakistan], July 6: Following the introduction of the fiscal year 2024-25 budget, Pakistan has seen a notable rise in inflation. The weekly inflation rate climbed by 1.28%, and the annual inflation rate surged to 23.59%, according to the Pakistan Bureau of Statistics (PBS).

Price Increases

The PBS report highlights that prices for 29 essential items have increased over the past week. Notably, tomato prices soared by 70.77%, surpassing PKR 200 per kilogram. Flour prices rose by 10.57%, powdered milk by 8.90%, diesel by 3.58%, petrol by 2.88%, and LPG by 1.63%. Prices for chicken, pulses, and garlic also saw increases.

Price Decreases

Onion prices decreased by 9.05%, and potato prices by 1.04% during the same period. Five items maintained stable prices.

Consumer Price Index

Earlier reports from July 1 indicated that the Consumer Price Index (CPI) inflation stood at 12.6% year-on-year in June 2024, compared to 29.4% in June the previous year. On a month-on-month basis, CPI inflation rose by 0.5% in June 2024.

New Tax Measures

On June 29, the Pakistani government announced new tax measures to generate additional revenue and meet the International Monetary Fund’s criteria. These measures include a capital value tax on property in Islamabad and new taxes on builders and developers. The Petroleum Development Levy (PDL) on diesel and petrol was reduced from PKR 80 to PKR 70 per litre but increased from the existing PKR 60. Exporters will now pay a standard corporate tax rate of 29% and a super tax where applicable. Individuals earning over PKR 10 million per year will be subject to a 10% surcharge on their income tax.

In a deep economic crisis, Pakistan’s parliament recently passed a tax-heavy finance bill for the upcoming fiscal year amid ongoing negotiations for a new International Monetary Fund (IMF) bailout.