The Consumer Price Index (CPI), the inflation monitor, jumped 31.5% in February year-on-year, the Pakistan Bureau of Statistics (PBS) said on Wednesday, the highest annual rate in nearly 50 years, as food, beverage and transportation prices surged more than 45%.
February’s 31.5% rate is the highest since 1974, a spokesperson for the PBS told Reuters, adding that yearly average inflation for the 1973-1974 financial year was 32.78%.
Prices were up 4.3% last month from the month before, the bureau said in a statement. In January, the CPI increased 27.55% year-on-year.
Food and non-alcoholic beverage prices rose by 45.07% over last year, while alcoholic beverage and tobacco prices jumped 47.59% due to an increased tax on cigarettes.
The fresh inflation reading issued by the Pakistan Bureau of Statistics (PBS) on Wednesday has also augmented the prospects of a further rise in interest rates in the upcoming monetary policy committee (MPC) meeting – which the central bank has preponed for March 2. The pace of increase in the prices beats the expectations of the finance ministry that had just a day ago given a 28% to 30% inflation range.
The inflation reading suggests that the government will have to review its strategy to unlock the critical $1.1 loan tranche from the International Monetary Fund (IMF). The government has not been able to regain any lost ground from the IMF and is giving one after another shock to the people.
The core inflation, calculated after excluding the volatile energy and food prices, also spiralled to 17.1% last month in urban areas and 21.5% in rural areas, signalling price growth is gathering pace across most categories of goods and services. Going forward, Tawfiq said that inflation is likely to remain elevated on the back of higher food prices (especially due to the Ramadan factor), tariff hikes and a weaker currency. The inflation rate – which has lingered above 20% since June after the coalition government curtailed imports – has been aggravating due to the logjam of containers, the weaker rupee against the dollar, and the tough strategies implemented by the Ishaq Dar-led Ministry of Finance.
The Wholesale Price Index (WPI), which monitors prices in the wholesale market, also rose sharply to 36.4% in February compared to 23.6% in the same month a year ago. The PBS reported that the overall inflation rate recorded an increase in both the urban and rural areas. The inflation rate in urban areas surged 28.8% in February and rural areas soared 35.6% over the same month of the last year. In February last year, the inflation rate in urban areas was 11.5% meanwhile, in rural areas it stood at 13.3%.
The food inflation rate in villages and cities soared to 47% and 41.9%, respectively, on a yearly basis. In February 2022, food inflation for villages and cities clocked in at 14.6% and 14.3%, respectively. The non-food inflation rate was recorded at 20.8% in urban areas and 25.3% in rural areas compared to 9.9% and 12.2% in the same month last year. The food group saw a price increase of 16.14% in February from the same month a year ago. Within the food group, prices of non-perishable food items surged 2.32% on an annualised basis; meanwhile, the prices of perishable goods surged up by 16.14% year-on-year.
The inflation rate for the housing, water, electricity, gas, and fuel group – having one-fourth weight in the basket – rose by 3.11% (year-on-year) in the last month. Average prices for the transport group increased by 3.34% in February. Prices related to restaurants and hotels surged 2.36% (year-on-year). On a month-on-month basis, the price of chicken jumped by 19.82%, followed by a 17.21% surge in cooking oil price, a 16.59% rise in vegetable ghee, and nearly 16% in cigarettes, according to PBS. The prices of pulses, fish, pulses, meat, and milk fresh recorded an increase within a range of 1.5-11% in the last month. The average inflation rate for the first eight months (July-February) of the current fiscal year came in at 26.19%, the PBS data showed.
Index-wise increase in inflation
* Transport: 50.45%
* Alcoholic beverages and tobacco: 49.2%
* Recreation and culture: 48.05%
* Perishable food items: 47.59%
* Non-perishable food items: 44.68%
* Restaurants and hotels: 34.54%
* Furnishing, household equipment maintenance: 34.04%
* Miscellaneous goods and services: 33.29%
* Health: 18.78%
* Clothing and footwear: 16.98%
* Housing and utilities: 13.58%
* Education: 10.79%
* Communication: 3.69%