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'Higher than expectations': Pakistan's headline inflation clocks in at 27.6% in January

  • This is the highest inflation reading since 27.8% recorded in May 1975, says analyst
  • CPI inflation in rural areas increased to 32.3% on year-on-year basis in January 2023
Published February 1, 2023

Consumer Price Index (CPI)-based inflation clocked in at 27.6% on year-on-year basis in January 2023 as compared to an increase of 24.5% in the previous month and 13% in January 2022. On month-on-month basis, it increased to 2.9% in Jan 2023, showed data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.

“CPI inflation General, increased to 27.6% on year-on-year basis in Jan 2023 as compared to an increase of 24.5% in the previous month and 13.0% in Jan 2022,” said the PBS.

This is the highest inflation reading since 27.8% recorded in May 1975, said Fahad Rauf, Head of Research at Ismail Iqbal Securities Limited.

Experts said food inflation was the major driver behind the hike. It increased from 162.23 in January 2022 to 231.89 in January 2023, a jump of almost 43%.

“Shortage of essential items amid import restrictions have increased prices of food items i.e. chicken, wheat and onions,” Rauf told Business Recorder.

He added that the inflation rate is expected to increase further amid the impact of the recent rupee depreciation and increase in the prices of petroleum products.

Pakistan’s headline inflation clocks in at 24.5% in December

Topline Securities said the latest reading takes 7MFY23 average inflation to 25.4% compared to 10.3% in 7MFY22.

“Inflation remained higher than market expectations,” it added.

Arif Habib Limited (AHL) had said earlier: “We expect January 2023 inflation to settle at 25.8% YoY compared to 24.5% in December 2022 and 12.96% in January 2022, respectively. With this, average inflation for 7MFY23 clocks-in at 25.2% compared to 10.24% in 7MFY22.”

The Finance Division had predicted CPI-based inflation in the range of 24%-26% in January 2023 on a year-on-year basis.

It said it expected inflationary pressure in Pakistan to ease up gradually following flood-led damages that disrupted the supply of essential items.

Its Monthly Economic Update & Outlook January 2023 released on Tuesday said rising prices of onions and wheat are key factors affecting the general price level.

Rural and urban inflation

CPI inflation in urban areas increased to 24.4% on year-on-year basis in January as compared to an increase of 21.6% in the previous month and 13% in January 2022.

On month-on-month basis, it increased to 2.4% in Jan 2023 as compared to an increase of 0.3% in the previous month and an increase of 0.1% in January 2022.

Meanwhile, CPI inflation in rural areas increased to 32.3% on year-on-year basis in January 2023 as compared to an increase of 28.8% in the previous month and 12.9% in Jan 2022.

On month-on-month basis, it increased to 3.6% in Jan 2023 as compared to an increase of 0.7% in the previous month and an increase of 0.9% in Jan 2022.

Inflation to cross 30% as rupee depreciation, petrol prices bite: report

Economic woes

High inflation is just one of the woes currently putting Pakistan’s economy in distress as it also faces a balance of payments crisis.

The South Asian nation has reserves of just $3.7 billion remaining, barely enough for three weeks of essential imports. While experts are urging the government to revive the stalled International Monetary Fund (IMF) programme, policymakers have one eye on inflation and another on political capital as general elections loom.

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bonce richard Feb 01, 2023 05:01pm
@Noman Qazi, Since 1947 we adopted the policy of Yes Man. We are not an independent country but we take the dictation from others. Our corrupted army and politicians are not sincere about the country. Only in 1970, there was a fair election but our Big brothers Punjabi did not hand over power to the winner, as a result, we lost one wing. We depend on Zakat Fitra charity we never think of standing on our feet.
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Teerath Dass Feb 01, 2023 07:11pm
Study
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Teerath Dass Feb 01, 2023 07:11pm
School
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Hashbrown® Feb 01, 2023 08:42pm
Pretty please elect my papa imran. I am his pretty little princess
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