Pakistan's inflation crisis deepens as fuel hike triggers fresh economic shock

Islamabad [Pakistan], November 11 (ANI) Pakistan's fragile economy has once again been jolted by a new surge in fuel prices, with the government announcing that petrol will now cost PKR 265.45 per litre after a rise of PKR 2.43, while high-speed diesel climbed by PRK 3.02 to PKR 278.44. Though these adjustments are presented as routine, they have unleashed a new wave of inflationary strain on citizens already buckling under relentless price pressures, as reported by Dawn.

According to Dawn, for ordinary Pakistanis, this is not merely a price revision; it is another heavy blow to already stretched household budgets.

Each fuel price increase sets off an inflationary chain reaction that impacts food, electricity, transport, and industrial costs, embedding inflation deeper into daily life and ensuring it persists beyond short-term economic cycles.

The Pakistan Bureau of Statistics revealed that headline inflation jumped to 6.2 per cent year-on-year in October 2025, marking the highest rate in a year.

The spike was primarily driven by surging food prices following devastating monsoon floods and supply disruptions caused by the conflict with Afghanistan. The State Bank of Pakistan (SBP) has kept the policy rate unchanged at 11 per cent in hopes of keeping inflation within the 5-7 per cent range for the current fiscal year.

Pakistan's inflation stems from a combination of domestic shocks, policy inconsistencies, and dependency on imported essentials.

Despite being an agricultural country, Pakistan relies heavily on imports of wheat, pulses, edible oil, and tea, all vulnerable to global price shifts and exchange rate fluctuations. Market concerns over a delayed IMF loan tranche have further intensified fears of a weakening rupee, which traders have already priced into commodities, as cited by Dawn.

The contradiction between the SBP's tight monetary stance and the government's extensive bank borrowing exacerbates inflationary pressure.

Pakistan's broad money supply reached PKR 40.8 trillion by June 2025, with over Rs10.6 trillion in cash circulation, the highest in history. Meanwhile, the energy sector's circular debt climbed to PKR1.7 trillion, feeding into persistent price hikes. Pakistan's inflation crisis has evolved beyond an economic issue; it now represents a moral test of governance and fiscal responsibility, as reported by Dawn. (ANI)

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