Pakistan Inflation Accelerates to 11.7% on Oil and Gas Import Shock

The surge in international oil and gas prices amid the Iran war hiked Pakistan’s inflation to the highest level in two years as energy import costs ballooned.

Pakistan’s general inflation jumped to 11.7% in May from a year earlier, accelerating from 10.9% annual inflation in April, according to data from the Pakistan Bureau of Statistics published on Monday.

The core inflation, which excludes food and energy, jumped by 9% year over year and by 8% month over month in May for urban areas, the statistics data showed.

The biggest annual increases in Pakistan’s prices were registered in sorghum, wheat, jet fuel, diesel, and gasoline prices, according to the statistics bureau.

The price of jet fuel soared by 94%, diesel prices jumped by 70%, and motor gasoline prices surged by 62% in May compared to the same month last year.

The worst supply disruption in history has severely hit the Asian economies, which rely on the Middle East for most of their oil and gas supply. Pakistan is one of these, and has struggled to contain an inflation shock, escalating energy costs, and an energy crisis with frequent blackouts as LNG supply from Qatar was halted.

Pakistan – which has been mediating U.S.-Iran talks in recent weeks – has been negotiating to have Qatari LNG cargoes moved out of the Persian Gulf.

Pakistan has relied on Qatar’s term LNG supply for years, but the war in the Middle East and the closure of the Strait of Hormuz have led to the shutdown of Qatari LNG production and exports.

Without Qatar’s LNG, Pakistan has been reeling from an intensifying energy crisis with power outages and fuel rationing.

Thanks to a bilateral Pakistan-Iran agreement, two vessels carrying Qatari LNG have been arriving in Pakistan after successfully passing through the Strait of Hormuz in recent weeks.

By Charles Kennedy for Oilprice.com

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