In an alarming development, Pakistan’s inflation – measured by the Consumer Price Index (CPI) – broke all previous records and hit 31.5 percent in February due to a sharp rise in prices of food, accommodation and transportation groups. reached
The fresh inflation reading released by the Pakistan Bureau of Statistics (PBS) on Wednesday also raised the possibility of a further hike in interest rates at the upcoming Monetary Policy Committee (MPC) meeting – which the central bank has scheduled for March 2. Presented for
Inflation rose to 31.5 percent year-on-year in February – the highest since July 1965, according to available data. The last time, in April 1975, inflation was recorded at a little over 29 percent.
The pace of price hikes beat the expectations of the finance ministry, which had pegged inflation at 28 percent to 30 percent just a day earlier.
The monthly inflation rate rose by 4.3 percent in February compared to January – according to Sana Tawfiq, an economist at Arif Habib Ltd – due to an increase in the average prices of food items such as chicken, fruits, pulses, oil, vegetables. Ghee, LPG, Gas Charges, and Domestic Petroleum Products.
Inflation readings suggest the government may have to revise its strategy to unlock a key loan tranche of $1.1 billion from the International Monetary Fund (IMF). The government has not recovered any lost ground from the IMF and is giving one shock after another to the public.
Estimates of core inflation, excluding volatile energy and food prices, also rose to 17.1% in urban areas and 21.5% in rural areas last month, indicating price increases in most categories of goods and services.
Going forward, Tawfiq said inflation is likely to rise due to higher food prices (especially due to the Ramadan factor), tariff hikes and a weak currency.
CPI breakdown
Inflation – which has hovered above 20 percent since June after the coalition government cut imports – has been driven by container closures, a weaker rupee against the dollar, and the Ishaq Dar-led finance ministry. is increasing due to strict strategies. .
The Wholesale Price Index (WPI), which monitors prices in the wholesale market, rose sharply to 36.4 percent in February from 23.6 percent in the same month a year ago.
Both urban and rural areas recorded an increase in the overall inflation rate, PBS reported. The inflation rate in urban areas increased by 28.8 percent in February and in rural areas by 35.6 percent compared to the same month last year. In February last year, the rate of inflation in urban areas was 11.5 percent while in rural areas it was 13.3 percent.
Food inflation rate in rural and urban areas increased to 47% and 41.9% respectively on annual basis. In February 2022, food inflation in rural and urban areas stood at 14.6% and 14.3% respectively.
Non-food inflation was recorded at 20.8 percent in urban areas and 25.3 percent in rural areas as against 9.9 percent and 12.2 percent in the same month last year.
The food group saw prices rise by 16.14 percent in February from the same month a year ago. Within the food group, prices of non-perishable food items increased by 2.32% on an annual basis. Meanwhile, prices of perishable goods increased by 16.14 percent year-on-year.
The inflation rate for the housing, water, electricity, gas, and fuel group — which accounts for a quarter — rose 3.11 percent (year-on-year) last month.
Transport group average prices rose 3.34 percent in February. Prices related to restaurants and hotels increased by 2.36 percent (year-on-year).
According to PBS, on a month-on-month basis, chicken prices rose by 19.82 percent, followed by cooking oil by 17.21 percent, vegetable ghee by 16.59 percent and cigarettes by nearly 16 percent. Prices of pulses, fish, pulses, meat and fresh milk recorded an increase in the range of 1.5-11 percent in the last month.
PBS data shows that the average inflation rate for the first eight months of the current fiscal year (July-February) was 26.19 percent.
