Pakistan raises interest rate by 100 Bps, as rising food prices cause stampedes

Imagine 16 deaths in a stampede over food, that's a glimpse of the desperate situation in Pakistan after inflation soared past 35 per cent. With bananas at PKR 300 a dozen and beef at PKR 1,000 per kilo, the State Bank of Pakistan is scrambling to contain inflation breaking new records.

In a bid to control cash flow in the market during desperate times, it has drastically increased the interest rate by 100 basis points.

What's next for Pakistan?

This means that borrowing money from banks will become costlier than ever before, since the interest has touched highest level at 21 per cent.

Although such a move was expected for both Pakistan and Sri Lanka, the rate hike is still lower than the 200 basis points rise predicted by investors.

But higher borrowing costs will also hit business, in a country where mobile assembly units are already shutting down, putting thousands of jobs at risk.

Risking life for basic commodities

• Unorganised distribution of flour, weeks after people were seen fighting for the commodity, led to a stampede in Karachi.

• Eight women and three children were reportedly among those killed at the Ramzan food distribution center.

• The rising prices have also led to a surge in the crime rate for Pakistani cities such as Lahore.