Inflation in Pakistan rises to two years high
Inflation further rised to 13% in January 2022
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.
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.
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