Pakistan’s inflation rate soared to 28.3 percent in July, marking a significant increase of 3.46 percent, according to a report released by the Pakistan Bureau of Statistics (PBS). This surge in inflation comes amid ongoing political turmoil and economic crisis in the country.

The finance ministry earlier expected the inflation rate to remain, between 25 percent and 27 percent, but the actual number has surpassed estimates and reached a new high, ARY News reported. The cost of essential items has gone up due to inflation.

The report further highlights the substantial increase in the prices of potatoes, tomatoes, fresh vegetables and fruits. Potatoes saw an 8.16 percent increase, while fresh vegetables surged by 37.64 percent in July, according to ARY news. Tomatoes witnessed a spike of 33.45 percent in price while fresh fruits became costlier by 17.90 percent. The soaring food prices are adding a burden to the already struggling households.

Worsening the situation for households, the federal government recently announced an increase in petrol prices by Rs 19.95 per litre. Pakistan’s Finance Minister Ishaq Dar explained that the hike was necessary to comply with commitments made to the International Monetary Fund (IMF) and implement the petroleum development levy (PDL) rates.

This increase in fuel prices is expected to have ripple effects on transportation costs and overall inflation.

Meanwhile, Pakistan’s central bank on Monday kept key rates unchanged at 22 percent after the meeting of its monetary policy committee. According to Governor Jameel Ahmad the inflation outlook for the next fiscal year was between 20 percent and 22 percent, reported Reuters.

The situation remains critical as Pakistan grapples with mounting external debt and liabilities. According to the United States Institute of Peace (USIP) report, the country's external debt stands at $126.3 billion. The majority of this debt, around $97.5 billion, is directly owed by the government to various creditors. Moreover, Pakistan owes roughly $45 billion to multilateral institutions, $8.5 billion to the Paris Club and private bonds amounting to $7.8 billion, including Eurobonds and global Sukuk bonds.

The USIP report suggests that Pakistan's economic managers have limited options to address the external debt burden. The first option is to seek fresh loans and debt rollovers, while the other possibility is the pre-emptive restructuring of debt to ease repayment pressures.

(Edited by : Sudarsanan Mani)