The State Bank of Pakistan says that during the financial year 2020, Pakistan witnessed the highest inflation in the world.
According to the State Bank of Pakistan’s inflation review report released for April, “Pakistan has witnessed the highest inflation rate not only in the developing world but also in the developed economies.”
During the current financial year, the SBP raised interest rates to ease inflationary pressures, but the high-interest rates had the opposite effect and not only increased inflation but also the private sector, which hampered industrial growth and services stop borrowing money.
According to the report, inflation was at a 12-year high of 14.6 percent in January, and the SBP had raised interest rates to 13.25 percent in response to the rise in prices.
However, a drop in demand due to the spread of the coronavirus forced the SBP to cut interest rates to 5.25% in just three months.
According to a detailed graph of the SBP’s inflation review, Pakistan’s inflation has declined since the global epidemic compared to developing economies such as China, Thailand, Bangladesh, India, and Sri Lanka.
Inflation in the July-May period of the current financial year was lower than the SBP’s estimate of 1.94 – 11%, which is likely to decline further in June.
According to the report, the SBP provided billions of rupees in relief on deferred repayment of loans, rescheduling of loans, and providing loans on easy terms to prevent job losses in the industrial sector.