Pakistan's Inflation Climbs Despite Interest Rate Freeze

Consumer price inflation in Pakistan surged by 3.2% on a year-over-year basis in June, closely aligning with projections from the finance ministry of between 3% and 4%. Month-over-month, inflation saw a 0.2% uptick, countering the 0.2% drop recorded in May.

This data release follows the State Bank of Pakistan's decision to maintain its main interest rate at 11% during the month. The central bank anticipates some short-term inflation volatility but expects it to stabilize within a 5% to 7% range.

These developments unfold against the backdrop of Pakistan's newly unveiled annual budget, featuring new taxes and subsidy reductions as part of a strategy to obtain a loan from the International Monetary Fund. Market analysts caution that increased energy and tax expenses may heighten inflationary pressures in the latter half of the year. Meanwhile, the Pakistan stock exchange saw a 2.3% increase, marking an all-time high at the start of the new fiscal year.

(With inputs from agencies.)