Islamabad: The consumer price index (CPI), which measures inflation in Pakistan, broke all previous records and soared to 31.5% in February as a result of sharp increases in the costs of transportation, housing, and food.
The Pakistan Bureau of Statistics (PBS) released a new inflation reading on Wednesday, which has increased the likelihood that interest rates will rise further at the March 2 meeting of the monetary policy committee (MPC). The inflation rate quickly reached 31.5% in February over the prior year, which is the highest since data were available, in July 1965. When it was last measured, in April 1975, the inflation rate was just over 29%.
The rate of price growth exceeds what the finance ministry had predicted, which was a range of 28% to 30% inflation. According to Sana Tawfiq, an economist at Arif Habib Limited, the increase in the average price of food items like poultry, fruits, pulses, oil, vegetables, ghee, LPG, gas charges, and domestic petroleum products is what caused the monthly inflation rate to increase by 4.3% in February over January. The government may need to reconsider its plan in order to obtain the crucial IMF loan tranche of $1.1, according to the inflation reading. The government is continuously shocking the IMF and hasn’t been able to make up any lost ground.
The core inflation rate, which is determined after taking volatile energy and food prices out of the equation, also skyrocketed to 17.1% in urban areas and 21.5% in rural ones last month, indicating that the rate of price growth is accelerating across the majority of good and service categories. In the future, according to Tawfiq, inflation is likely to stay high due to rising food prices (especially due to the Ramadan factor), tariff increases, and a weaker currency. Due to the container backlog, the weaker rupee against the dollar, and the tough policies put in place by the Ishaq Dar-led Ministry of Finance, the inflation rate—which has lingered above 20% since June after the coalition government restricted imports—has been escalating.
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.
