Pakistan's CPI-based inflation in November clocks in at 23.8%

Consumer Price Index (CPI)-based inflation clocked in at 23.8% in November 2022 on a year-on-year (YoY) basis. On a month-on-month basis, it increased to 0.8% in November as compared to an increase of 4.7% in the previous month, showed data released by the Pakistan Bureau of Statistics (PBS) on Thursday.

"CPI inflation General, increased to 23.8% on year-on-year basis in Nov 2022 as compared to an increase of 26.6% in the previous month and 11.5% in Nov 2021," said the PBS.

"This takes 5MFY23 average inflation to 25.14% compared to 9.32% in 5MFY22," said Arif Habib Limited (AHL) in a note.

In June 2022, the inflation reading had crossed the 20% mark, surging to an over 47-year high level of 27.3% in August 2022 on a year-on-year (YoY) basis.

The inflation reading comes as per market expectations.

Earlier, the Ministry of Finance in its monthly outlook for the month of October said Pakistan’s November CPI is expected to decline marginally and may remain in the range of 23% to 25%.

The outlook said inflationary pressure was expected to ease marginally month-on-month due to smooth domestic supplies, unchanged energy prices in November and a stable exchange rate.

CPI-based inflation jumps in October, clocks in at 26.6%

Moreover, Ismail Iqbal Securities Limited (IISL) also expected headline inflation to witness a month-on-month slowdown and drop to 24.4% in November.

“We estimate the headline inflation to slowdown in Nov-22 to 1.2% MoM vs 4.7% in Oct-22 and avg 2.9% over the past 6 months. The MoM slowdown is mainly led by absence of electricity adjustment and quarterly house rent revision, and lower food inflation,” the brokerage house said.

Rural and Urban inflation

As per PBS, CPI inflation in urban areas increased to 21.6% on year-on-year basis in November 2022 as compared to an increase of 24.6% in the previous month and 12% in November 2021.

On month-on-month basis, it increased to 0.4% in November 2022 as compared to an increase of 4.5% in the previous month and an increase of 2.9% in November 2021.

Moreover, CPI inflation in rural areas increased to 27.2% on year-on-year basis in November 2022 as compared to an increase of 29.5% in the previous month and 10.9% in November 2021.

On month-on-month basis, it increased to 1.3% in November 2022 as compared to an increase of 5% in the previous month and an increase of 3.1% in November 2021.

Rising inflation has emerged as a critical concern for Pakistan's economy, facing a depleting foreign exchange reserves, which have dropped below $8 billion.

Last week, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) raised the key interest rate by 100bps, taking it to 16%, the highest since 1998-1999.

The MPC was of the view that amid the ongoing economic slowdown, inflation is increasingly being driven by persistent global and domestic supply shocks that are raising costs.

"This decision reflects the MPC’s view that inflationary pressures have proven to be stronger and more persistent than expected. It is aimed at ensuring that elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis," the MPC said in a statement.

On the other hand, the government, in a late-night development on Wednesday, announced to keep the prices of petrol and high-speed diesel (HSD) unchanged for the next 15 days.