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Pakistan’s CPI inflation reading in March clocks in at 35.4% YoY

  • Inflation is expected to maintain an upward trend till May, says expert
Published April 1, 2023
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The Consumer Price Index (CPI)-based inflation clocked in at 35.4% on a year-on-year basis in March 2023 compared to an increase of 31.5% in the previous month and 12.7% in March 2022. On a month-on-month basis, it increased to 3.7%, showed data released by the Pakistan Bureau of Statistics (PBS) on Saturday.

“This is the highest year-on-year inflation since the available data i.e. July 1965,” said Arif Habib Limited (AHL) in a note. “This takes 9MFY23 average inflation to 27.3% compared to 10.8% in 9MFY22,” it added.

As per PBS data, the food group, which commands a significant weight i.e. 34.58% in the inflation reading, remained the major driver behind the increase. It increased from 170.06 in March 2022 to 250.25 in March 2023, a jump of over 47%.

The transport group witnessed an increase of 55% YoY.

“Going forward, inflation is expected to stay in this range at least for the next two months,” said Arsalan Siddiqui, Head of Research at Optimus Research, told Business Recorder.

“It will recede from June onwards due to high base effect,” added the analyst.

The market expert said that the significant spike in food inflation was led by an increase in wheat prices. “Moreover, the Ramadan factor also contributed to hiking fruit prices,” said Siddiqui.

“Meanwhile, the transportation index was driven by a significant hike in auto rates in March, alongside, an increase in the POL prices,” he said.

Pakistan’s headline inflation reading in February hits 31.5% YoY

JS Global Limited had earlier stated in a report that CPI-based inflation for March 2023 is expected to clock in at 34.34% YoY, highest since at least 1965, with a month-on-month increase of 2.95%.

“In addition to higher food being the usual culprit, higher gas prices amid long-due adjustment in gas tariffs and higher cigarette prices over recently applied higher FED (Federal Excise Duty) are among key drivers,” the report said back then.

Meanwhile, the Finance Division in its latest Monthly Outlook report had predicted inflation to remain high, and may even increase further due to “market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel”.

Its monthly economic update and outlook for the month of March released on Friday said that due to the lagged effect of floods, production losses especially of major agriculture crops has not yet been fully recovered.

“Consequently, the shortage of essential items has emerged and persisted. Inflation may further jack up as a result of second round effect”.

Rural and urban inflation

CPI inflation in urban areas increased to 33.0% on year-on-year basis in March 2023 as compared to an increase of 28.8% in the previous month and 11.9% in March 2022.

On a month-on-month basis, it increased to 3.9% in March 2023 as compared to an increase of 4.5% in the previous month and an increase of 0.7% in March 2022.

Meanwhile, CPI inflation in rural areas increased to 38.9% on year-on-year basis in March 2023 as compared to an increase of 35.6% in the previous month and 13.9% in March 2022.

On a month-on-month basis, it increased to 3.5% in March 2023 as compared to an increase of 4.0% in the previous month and an increase of 1.0% in March 2022.

Economic stress

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

Pakistan is reeling from one of its worst economic crises in history. The South Asian country has been faced with a barrage of woes with a perceived default risk and a downgrade by international rating agencies reflecting the state of the economy that has also had to bear major political turmoil and frequent change in key leadership.

The IMF funding is critical for Pakistan to unlock other external financing avenues, and the two have been negotiating since early February to resume $1.1 billion in funding held since November, part of the bailout agreed upon in 2019.

Additionally, the State Bank of Pakistan (SBP) has decided to convene a meeting of the Monetary Policy Committee (MPC) on Tuesday to deal with the emerging risks to the economy due to uncertain developments.

The central bank looks likely to raise its key interest rate by 200 basis points to 22% at its review on April 4.


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KhanRA Apr 01, 2023 12:48pm
Wow another achievement by PML-N and their idiotic family relation, Ishaq Dar. Pakistan’s collapse must be appropriately assigned to them: economy was fine under Imran under Covid, fine under Miftah Ismail with floods and Ukraine war. As soon as Dar comes in, he destroys the economy and country. At this point we should be getting apology letters ready so that we can convince india to take us back - because Muslim League birthed Pakistan, and is now destroying it.
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KhanRA Apr 01, 2023 01:52pm
@Fast track , stop appealing to nationalism to detract from the very real, even existential problems, that are the direct result of Ishaq Dar’s incompetence. His performance lis the result of the Sharifs daughter being married to his son. They have destroyed Pakistan because of nepotism.
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KhanRA Apr 01, 2023 01:55pm
@Abdullah, are you so partisan that you cannot see what happened to economy? Miftah Ismail handled it well too. But as soon as Dar comes in, he depletes foreign exchange to prop up the rupee, and now we are almost bankrupt for it. Our foreign reserves were stable until he came up with his idiotic plan. And only when he implemented plan did foreign reserves crash. And yea, it was an idiotic plan - propping yo the ruppee makes imports cheaper and exports weaker. This is the exact opposite of what developing countries need. He tried to defy conventional economic theory, and now we are about to default.
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Jack Apr 01, 2023 02:43pm
Please bring back Miftah Ismail(Phd) - an economist in place of this current chartered account and fraudster Ishaq Dar (BCom). Miftah worked as an economist with the IMF too. Maybe things would been better with the IMF if he had been around.
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Parvez Apr 01, 2023 05:00pm
Thank you.....PML-N, PPP, JUI-F and other PDM partners.
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Farooq Ansari Apr 01, 2023 05:14pm
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John Apr 01, 2023 05:44pm
What a pity! Indian patriotic leadership has made India a G-20 country...it has FX reserves of more than $570 billion...China who gained independence after India and Pakistan has FX reserves more than $3300 billion...India and China have developed their intellectual capital...their youth are finding jobs all over the world...where does Pakistan stand...with a begging bowl...just a FX reserves of mere $3 billion...Pakistani youth are escaping overseas and dying in high seas for better future...all the crooks have looted and plundered national wealth and lands...and now they want to rob...rule of law...and the constitution...enough is enough! People of Pakistan stand with the SC and the constitutions! Time has come finally to protect the country and punish the crooks!
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A. Tahir Apr 05, 2023 02:07pm
@Jack, He is a con artist too! Why he keeps standing with the crooks!
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A. Tahir Apr 05, 2023 02:08pm
@John, Unfortunately institutions are too week and corrupt elite very strong; in the end people will change things via street!
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