Finance Ministry Links Rupee Weakening To Political Unrest.

ISLAMABAD -- The Ministry of Finance has noted that the ongoing political unrest is not only creating governance problems but also intensifying the uncertainty depicted by exchange rate depreciation which will, in turn, impact the cost of producAtion. The ministry has projected that inAflation would remain on higher side at around 20 percent in the current month (July). 'Inflation has accelerAated more than 20 percent and may continue to remain high in the imAmediate short run,' the Ministry of Finance noted in its 'Monthly EcoAnomic Update and Outlook July 2022'.

The CPI Inflation was recorded at 21.3 percent in June 2022 as against 9.7 percent in the same month last year. According to the ministry proAjection, inflation in July 2022 may hover around the level observed in June. International inflationary imApulses in the US dollar became amAplified by the accelerated depreciAation of the rupee against the US dollar. International spike in dollar rates and domestic uncertainty deApreciated Pakistani rupees to almost 11.5 percent in the first 20 days of FY2023. These cost-push inflation drivers feed into the domestic retail prices. Up to May 2022, the governAment policies among which the use of taxes and subsidies, temporarily and partially postponed their pass-through into the CPI. Furthermore, usually in the month of July, a posiAtive seasonal factor appears to conAtribute upwards to the MoM inflaAtion rate. All these critical factors will influence domestic inflation.

'High international prices...