According to government data released on Tuesday, Pakistan’s headline inflation decreased for the second consecutive month in July. However, a fuel price increase announced overnight may cause a new increase in August.

According to the Bureau of Statistics’ monthly report, year-over-year inflation was 28.3 percent as opposed to 29.4 percent in June, with food prices acting as the main driver.

Prices increased by 3.5% from one month to the next.

In an effort to keep prices stable, the central bank retained the benchmark interest rate at 22 percent even though May’s inflation rate reached a record high of 38 percent.

The Covid pandemic, a worldwide energy crisis, and historic floods that swamped a third of the nation last year have all contributed to Pakistan’s economy being stretched to its breaking point as a result of years of financial mismanagement.

However, Islamabad and the IMF last month reached a $3 billion standby agreement that would offer short-term relief for the nation’s soaring foreign debt.

Although the agreement compels the government to eliminate a number of subsidies that benefit the poor, the increase in fuel prices is mostly in line with a rise in oil prices globally.