Rising food and fuel prices in Pakistan pushed inflation to 13.8 percent in May

Amid a weakening currency, rising food and fuel prices pushed Pakistan’s headline inflation to a two-year high in May. Consumer prices rose 13.8 percent this month from a year earlier, according to data released by the government on Wednesday. This is lower than the average estimate of 14.4% growth in economists’ Bloomberg survey and compares to 13.4% growth in April. Rising global commodity prices and rising imports are fueling Asia’s second-fastest inflation. The country’s central bank has already raised interest rates by 675 basis points to stem rising prices.

Consumer prices are likely to rise after the government raised fuel prices late last month as part of an effort by the International Monetary Fund to meet the conditions for reviving a stalled relief program. As Pakistan is trying to reach an agreement with the lender to access the remaining $3 billion of the existing debt to prevent default. The country needs about ً 36 billion in financing for the fiscal year beginning in July. Other measures, including rising electricity and electricity tariffs, could further headline inflation.