Inflation in Pakistan rises to two years high

 Inflation further rised to 13% in January 2022

According to the data released by Pakistan Bureau of Statistics (PBS), the inflation continues to rise in Pakistan and reached to 13% in January 2022. This is the highest inflation rate in nearly two years. Pakistan had reported 14.6% inflation rate in January 2020.

The PTI government’s economic decisions coupled with steep currency depreciation are making food, electricity and transport unaffordable for the common man. The rising prices of electricity and energy are contributing towards rising inflation.

The latest inflation reading suggests that prices have gone out of the control of the government, which has not yet fulfilled its promise to reduce ghee prices by Rs45 to Rs290 per kilo by slashing duties and taxes. The mini- budget is also playing its role in the price hike. The reduction in the rupee’s value is pushing up the cost of every imported commodity, including wheat, sugar, cooking oil, crude oil and raw material for industries. 

PBS has reported that the Consumer Price Index (CPI) jumped to 12.96% in January over the same month a year ago. On a month-on-month basis, inflation remained “flattish”, slightly rising by 0.4% owing to an increase in food inflation.

The economic experts had predicted inflation to remain high year-on-year because of base inflation being low last year; however, they had mentioned that the inflation rate depended on three factors; electricity prices, rupee-dollar parity and international commodity prices.

The transport index recorded a significant increase because of rising oil prices in the international market and its spillover impact on local petroleum product prices. The Wholesale Price Index (WPI), which captures prices in the wholesale market, also rose sharply by 24% in January compared to 6.4% 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 edged to 13% in January and rural areas surged to 12.9% over the same month of the last year. In January last year, the inflation rate in urban areas was 5% meanwhile, in rural areas it stood at 6.6%.

The food inflation rate in villages and cities surged to 13.3% and 11.8% on a yearly basis. In January 2021, food inflation for villages and cities clocked in at 7.2% and 7.3% respectively. The non-food inflation rate clocked in at 12.8% in urban areas and 13.9% in rural areas compared to 3.7% and 6.1% in the same month of last year.

Core inflation calculated by excluding food and energy items — rose by 8.2% in urban areas and by 9% in rural areas during the month under review, reported the national data collecting agency

The PBS stated that prices of various types of ghee and cooking oil were higher by 54% last month compared to a year ago. The inflation rate for pluses was over 41%, fruits 28%, meat 23% and vegetables 11.6%. Inflation rate for the housing, water, electricity, gas and fuel group increased 15.5% last month. A double-digit increase has witnessed in this group which contribute 25% to basket due to the government’s decision to increase prices of electricity by 56.2%.

Household equipment group’s prices increased 13% and transport group’s rates rose 23%, clothing and footwear group’s jumped over 11%, according to the PBS. Similarly, the dining cost at restaurants increased over 13%. The government has increased the GST rate on restaurants to 17% from 7.5% through the mini-budget.

The motor fuel was almost 36% expensive last month compared to a year ago. There is also 17% sales tax on match box and its prices were 18% higher in January than a year ago. The average inflation during the first seven months (July-January) period remained at double digits and stood at 10.3% -- far higher than the government’s target of 9% and initial projection made by the SBP.

                                                                           Web Desk

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