ISLAMABAD - Inflation in Pakistan accelerated to decades high 27.6 percent in January due to the continuous increase in food commodities prices. Inflation measured through consumer price indicator (CPI) increased to 27.6 percent in January this year — reportedly higher since 1975. On the month on month basis, it has increased to 2.9 percent in January 2023 as compared to an increase of 0.5 percent in the previous month (December), according to the latest data of the Pakistan Bureau of Statistics (PBS).
The inflation remained much higher than the projection of the Ministry of Finance. The recent political and economic uncertainties are causing inflationary expectations upward. The CPI inflation on year to year basis for January 2023 is forecast in the range of 24-26 percent,” the ministry noted in its monthly report. Inflationary pressure is expected to calm down gradually due to the flood-led damages which have disrupted the supply of essential items .
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The economic experts believed that inflation would further fuel in the country following the massive currency depreciation and increase in oil products. The government has recently removed an unofficial cap on the USD-PKR exchange rate, as a result of which the local currency lost Rs38.74 between Jan 26-30. Separately, it also hiked petrol prices by Rs35 a liter. The full impact of these measures would be reflected in CPI in next month. The government might also increase the power tariff to fulfil the IMF conditions, which would also increase the inflation rate. Under the plan, the government would raise the power tariff by Rs3.21 per unit in the first quarter (February-March), followed by another 70-paisa increase in the March-May period and then a Rs1.64 hike in the June-August quarter. The IMF is asking for increasing taxes. All these measures would fuel the inflation rate, which is already on the higher side in the country. The State Bank of Pakistan has recently increased the interest rate by one percent to 17 percent to control the soaring inflation rate.According to the PBS data, the CPI inflation for urban increased by 24.4 percent on year-on-year basis in January 2023.
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Meanwhile, the CPI inflation for rural has enhanced by 32.3 percent. Meanwhile, it has enhanced by 25.40 percent in seven months (July to January) of the current fiscal year. The Sensitive Price Index (SPI), which gauges rates of kitchen items on a weekly basis, increased by 28.56 percent. On a monthly basis, Wholesale Price Index (WPI) inflation on YoY basis increased by 33.26 percent in January 2022. The break-up of inflation of 27.55 percent showed that food and non-alcoholic beverages prices increased by 42.94 percent last month. Similarly, health and education charges went up by 18.73 percent and 10.58 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 7.83 percent in the last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 36.33 percent. Prices of clothing and footwear increased by 16.76 percent and furnishing and household equipment maintenance charges 29.9 percent. Recreational charges and those related to culture went up by 44.14 percent in the period under review, while amounts charged by restaurants and hotels by 30.10 percent in January 2023 as compared to the same month last year.
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In urban areas, the food items which saw their prices increased during January 2023 included chicken (24.62 percent), wheat (16.47 percent), rice (14.16 percent), wheat flour (13.23 percent), wheat products (11.7 percent), onions (9.74 percent), bakery & confectionary (5.43 percent), fresh fruits (5.19 percent), eggs (4.36 percent), pulse Moong (4.15 percent), pulse masoor (3.97 percent), dry fruits (3.75 percent), pulse gram (2.96 percent), gram whole (2.94 percent), beans (2.88 percent), pulse mash (2.49 percent), milk fresh (2.03 percent), fish (2 percent) and mustard oil (1.09 percent). In non-food commodities, prices of following commodities enhanced included solid fuel (3.23 percent), liquified hydrocarbons (2.81 percent), marriage hall charges (2.71 percent), house rent (1.66 percent), cleaning and laundering (1.62 percent), furniture And furnishing (1.42 percent), electricity charges (0.86 percent) and construction input items (0.78 percent).
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