Inflation rose to 31.4% year-on-year in September from 27.4% in August, data from the Pakistan Bureau of Statistics (PBS) showed Monday, as the nation faces high fuel and power rates.

The South Asian nation faces an uphill task when it comes to economic recovery under a caretaker government following the approval of a $3 billion loan by the International Monetary Fund in July.

The loan from the Washington-based lender helped the nation avert a sovereign default, but the conditions that came with it have made it difficult for the authorities to rein in inflation.

PBS data showed that on a month-on-month basis, inflation climbed 2% in September, compared to an increase of 1.7% in August.

The annual inflation already stands at a historic high of 38%, recorded in May — courtesy of IMF’s reforms, including the removal of subsidies and easing of curbs on imports.

The benchmark interest rates have also climbed to their highest at 22%, with the rupee hitting an all-time low against the dollar in August before recovering due to a crackdown on illegal greenback smugglers.

The Ministry of Finance, in its monthly report, said last week that it anticipates inflation to remain high in the coming month — hovering around 29-31% — due to a surge in petrol and energy tariffs.

The ministry’s report added that inflation was, however, expected to ease, especially from the second half of the current fiscal year that starts on January 1.

Analysts believe that inflation has peaked and expect that it will ease in the coming months.

The interim government also cut the prices of petroleum products — the first drop since mid-July.

The finance ministry cited international prices of petroleum products and the improvement in the exchange rate, following the clampdown on unregulated forex trade.