Pakistan's Inflation Reaches Two-Year High Amid Middle East Conflict

Pakistan's inflation has surged to its highest level in two years due to increased energy import costs driven by the Middle East conflict. According to Jin10, data released by the Pakistan Bureau of Statistics on Monday showed that the Consumer Price Index (CPI) rose by 11.7% year-on-year in May. The ongoing conflict in the Middle East has heightened risks for fuel-importing countries in Asia, as rising energy prices exacerbate inflation and put pressure on the balance of payments. This situation has compelled policymakers to implement emergency measures to stabilize the currency and mitigate economic impacts. In April, Pakistan's central bank raised interest rates for the first time in three years and is scheduled to hold its next rate review meeting on June 15. Since the onset of the conflict, Pakistani authorities have repeatedly increased fuel prices, with government data indicating that gasoline and diesel prices are now 48% and 38% higher than pre-war levels, respectively.