November 2, 2018 / 7:14 AM / 10 months ago

Pakistan October inflation at four-year high on gas price hike, rupee fall

A man selling vegetables waits for customers at his makeshift stall at the Empress Market in Karachi, Pakistan April 2, 2018. REUTERS/Akhtar Soomro/Files

ISLAMABAD (Reuters) - Pakistan’s annual inflation rate jumped to 7 percent in October, the highest in four years, from 5.12 percent a month earlier, due to a steep rise in gas prices and multiple devaluations of the rupee.

On a month-on-month basis, prices spiked 2.56 percent in October, according to data released by the Bureau of Statistics on Friday. Prices fell 0.06 percent in September on the same basis.

The annual inflation rate is the highest since September 2014, when it had hit 7.68 percent.

The surge in inflation was caused by a 104.91 percent hike in gas prices. Pakistan’s central bank had warned in September that rising oil prices and currency devaluations were likely to push up underlying inflation.

The country’s central bank has devalued the local currency five times since December, weakening it by 26 percent against the dollar during the period.

In September, Pakistan raised natural gas prices by up to 20 percent, slashing consumer subsidies that were a fiscal drag on the government’s budget.

In an effort to avert a looming currency crisis, Pakistan has been seeking economic assistance from the International Monetary Fund and friendly countries.

Saudi Arabia agreed to a $6 billion rescue package earlier this month and new Prime Minister Imran Khan is visiting China this week in search of fresh loans from Beijing.

Reporting by Saad Sayeed: Writing by Drazen Jorgic; Editing by Rashmi Aich

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