ISLAMABAD: Amid the increasing political and economic turmoil in the country that continues to make the lives of citizens miserable, monthly inflation has soared to an all-time high, data released by the Pakistan Bureau of Statistics (PBS) showed Tuesday.
Inflation, measured by the Consumer Price Index (CPI), has been recorded at 36.42pc in April, putting the country ahead of Sri Lanka with the highest inflation rate in Asia.
The political and economic instability in Pakistan is believed to be a contributing factor to the rising prices, along with the devaluation of the rupee against world currencies. Also, the government’s efforts to secure a $1.1 billion tranche from the International Monetary Fund (IMF) is a factor.
This is the highest inflation ever, according to data available since 1965, Arif Habib Limited said.
According to Bloomberg, Pakistan has the fastest rising prices in Asia, which have left behind even Sri Lanka where inflation was measured at 35.3% in April.
Sana Tawfiq, an economist at Arif Habib Limited, said the headline inflation was in line with expectations. The prices of wheat, vegetables and fruits drove up food inflation, she said.
The ten-month July-April 2022/23 average inflation arrived at 28.23 percent against only 11 percent in the same period of FY22, the PBS reported.
In April, core inflation in Pakistan, which excludes food and energy components, hit its highest level since 2010, rising from 18.6 percent in March to 19.5 percent. This increase raises the possibility of another hike in the State Bank’s discount rate, which currently stands at 21 percent.
The sharp increase in inflation could have severe consequences for the economy and individuals alike, such as reduced purchasing power and decreased consumer confidence. Inflation can also be seen as an “invisible tax” on cash holders, as it erodes the purchasing power of money.
The government has taken various unpopular policy-level decisions to secure the IMF loan, including ending subsidies by increasing fuel and electricity prices, rupee devaluation, limiting imports, State Bank’s policy rate hike, and tax measures including raising general sales tax by a percentage point to 18 percent. The Finance Ministry has acknowledged that these decisions will likely keep inflation at elevated levels in the coming months.
The government has been in discussions with the IMF for several months in an effort to secure a tranche that was due in November 2022. However, no agreement has been reached thus far.
The monthly CPI bulletin said that inflation was 35.4 percent in March 2023 and 13.4 percent in April 2022. In one month, CPI jumped up 2.4 percent during April 2023.
Inflation has surged each month since April 2022 when it was at 13.4 percent. In May 2022, CPI rose to 13.8 percent, followed by June at 21.3 percent, July at 24.9 percent, August at 27.3 percent, September at 23.2 percent, October at 26.6 percent, November at 23.8 percent and December at 24.47 percent. In January 2023, CPI was at 27.6 percent, in February it increased to 31.5 percent, in March it was 35.4 percent and now in April, it has surged to a record level of 36.4 percent on a year-on-year basis.
In April 2023, food inflation surged to 48.1 percent from 47.15 percent in March. Meanwhile, transportation charges increased by 56.77 percent, compared to 54.94 percent the previous month, while recreation and culture costs rose to 68.6 percent, compared to 50.6 percent in March. Tobacco products were 133.5 percent more expensive, down slightly from 140 percent in March, while the cost of restaurants and hotels rose to 39 percent, up from 38.5 percent.
Similarly, in April, furnishing and household equipment maintenance charges rose to 40.5 percent, up from 39 percent in March. Clothing and footwear cost also increased by 21.6 percent, while health charges rose by 18.77 percent. Housing, water, electricity, gas, and fuel costs increased by 16.9 percent, slightly down from 17.5 percent in March, and education charges were higher by 8.5 percent, up from 7.2 percent in March.
The monthly CPI bulletin further says that prices of several food items saw a sharp increase in April 2023. The cost of cigarettes rose the most by 160 percent, followed by tea at 109 percent, wheat flour at 107 percent, wheat at 104 percent, eggs at 101 percent, rice at 88 percent, potatoes at 77 percent, lentil Moong at 57 percent, Mash at 56 percent, chickpeas at 56 percent, onions at 52 percent, Besan at 51 percent, dry fruits at 49 percent, lentil gram at 48 percent, beans at 47 percent, chicken at 43 percent, and bakery and confectionery items at 43 percent. However, tomato prices saw a decrease of 48 percent.
Non-food items also witnessed a surge in prices in April 2023. Textbook prices increased by 107 percent year on year, stationery by 84 percent, motor fuel by 75 percent, gas charges by 63 percent, washing soap/ detergents/ matchbox by 60 percent, motor vehicle accessories by 43 percent and motor vehicles by 42 percent. Other items that experienced a notable increase in prices included household equipment by 41 percent, construction input items by 37 percent, marriage hall charges by 33 percent, and personal grooming services by 32 percent. Furthermore, cotton cloth prices increased by 31 percent, electricity charges by 31 percent, plastic products by 31 percent, and transport services by 29 percent. Mechanical services saw a 25 percent hike in prices, followed by cleaning and laundering by 24 percent, doctor clinic fee by 22 percent, and tailoring charges by 21 percent. The PBS bulletin also pinpoints that inflation was considerably higher in rural Pakistan than in urban centers. Urban inflation increased by 33.5 percent yearly in April 2023 as compared to 33 percent in March 2023 and 12.2 percent in April 2022. Rural CPI increased 40.7 percent on a year-on-year basis in April 2023 as compared to an increase of 38.9 percent in the previous month and 15.1 percent in April 2022. The Wholesale Price Index (WPI) also increased by 32.8 percent in April 2023 against 28.1 in April 2022.
The weekly sensitive price indicator (SPI) also increased 42.1 percent in the month under review as compared to an increase of 40.4 percent last month and 14.2 percent in April 2022.
