Karachi: Pakistan said inflation in April may accelerate to a record after increases in food and energy prices and a depreciation in the currency.

Price gains may be in a range of 36 per cent -38 per cent year-on-year, from 34.8 per cent in March, the finance ministry said in its monthly Economic Update and Outlook. A slow recovery in damages from last year’s floods has led to shortages of essential crops in the domestic market and exacerbated price pressures, it said.

Pakistan’s central bank this month increased its benchmark interest rate by 100 basis points to 21 per cent after consumer prices rose to a record in March. Headline inflation is expected to remain at elevated levels in the months to come, the report said.

The government has increased taxes and energy prices to meet the International Monetary Fund’s conditions for the revival of a $6.5 billion bailout program. Pakistan is facing serious economic challenges, which has increased risk of its default.

Pakistan’s fiscal deficit declined to 2.8 per cent of GDP in first eight months of the current fiscal year that started July, compared with 3.4 per cent in the same period the previous year, according to the report. Revenue collection during the July-February period was 31.2 trillion rupees ($110 billion) while expenditure was at 5.21 trillion rupees.