Crisis state Pakistan: flood disaster drives prices to record high

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Market in Lahore

Photo: Arif Ali / AFP

In Pakistan, the flood disaster could further accelerate high inflation, officials fear.

The consumer price index has already hit a record high, rising 27.3 percent year on year in August, data released by the government showed on Thursday.

Rising prices of staple foods, including vegetables, wheat and oil, are fueling inflation, the Pakistan Bureau of Statistics said.

In July it was 24.9 percent.

Economists say inflation in August rose to a high not seen in more than 40 years.

“People ask me if inflation is higher than ever.

The answer is, it hasn't been this high in 47 years, which is 1975," Khaqan Hassan Najeeb, an economist and former adviser to Pakistan's Treasury Ministry, told Reuters.

The 220 million Pakistanis were already affected by severe inflation before the flood disaster: the prices of fruit and vegetables in particular have been rising for a long time because heavy rains have ruined harvests and destroyed supplies - an early warning sign, like the worst floods in Pakistan in decades now leading to food shortages and record prices.

In addition, Pakistan is in a financial crisis, the country's foreign exchange reserves have sunk rapidly.

The rupee recorded a record fall against the dollar.

The government announced that more than 800,000 hectares of agricultural land were flooded, the cultivated crops were largely destroyed and new seeding prevented.

The government is now trying to import food quickly.

Trade Minister Naveed Qamar said on Wednesday they are close to a deal with Iran and Afghanistan - a country whose people are themselves struggling with hunger and food insecurity.

Qamar said it was about the import of vegetables and other edible goods, which still had to be approved by the cabinet.

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