Bloomberg Report Reveals Pakistan’s Inflation as Highest in Asia Amidst Energy Crisis

Bloomberg has reported that Pakistan currently holds the highest inflation rate in Asia, primarily due to soaring energy costs that have deeply affected the country’s economic stability. According to the report, the government’s decision to significantly increase energy prices to meet conditions set by the International Monetary Fund (IMF) has resulted in a dramatic surge in electricity rates.

Since 2021, electricity prices in Pakistan have skyrocketed by 155%, leading to severe economic repercussions for many citizens. The report indicates that the inflation rate, hovering around 12%, has eroded purchasing power, causing a noticeable decline in electricity consumption as people and businesses turn to alternative energy sources like solar panels.

The rise in electricity tariffs has sparked widespread protests across the nation, with many residents experiencing electricity bills that now exceed their monthly rents. The average per-unit electricity price for residential users increased by 18% in July, coinciding with Pakistan’s acquisition of a new $7 billion loan from the IMF.

In response to the mounting unrest, Prime Minister Shehbaz Sharif has announced a Rs50 billion ($180 million) subsidy to assist the poorest electricity users over the next three months. This measure aims to alleviate some of the financial strain caused by the recent hikes in energy costs.

The IMF bailout program, which includes restoring the viability of the energy sector through cost reductions and privatization of state-owned power distribution companies, is a key component of the agreement. However, the sector continues to struggle with significant losses due to theft, and transmission and distribution inefficiencies.