EDITORIAL: Pakistan Bureau of Statistics (PBS) has calculated Consumer Price Index (CPI) for August 2025 at 3 percent against 4.1 percent in July with a sizeable decline of 8.1 percent from August 2024. Independent economists challenge this data while also referring to the International Monetary Fund’s (IMF’s) conclusion that “important shortcomings remain in the source data available for sectors accounting for a third of GDP while there are issues with the granularity and reliability of Government Finance Statistics.” Needless to add, inflation data has serious political implications and tweaking it as much as possible, limited by what is credible, is not uncommon in other countries as well.
Two observations are in order. First, the monsoons began on 26 June 2025 with the impact of heavier than usual rains and glacial melts exacerbated by deforestation and failure to build water storage dams. Over weeks past the flood waters have continued to devastate crops, livestock and infrastructure (houses, roads, electricity, etc.) as well as stifling supply routes of perishables from farm to market.
And further, disturbingly, in the last week of August, India released floodwaters into Pakistani Punjab, regarded as the bread basket of the country, which is projected to create further food shortages, thereby raising prices in upcountry areas — floodwaters that are expected to reach Sindh with equally devastating impact on that province’s crops and infrastructure. In this scenario for the PBS to indicate that perishable index declined — from 276.46 in July to 243.08 in August is perhaps an aberration.
And second, the large number of people affected by the floods coupled with 22 percent unemployment countrywide as calculated in the 2023 Housing Census (carried out by PBS) is indicative of the fact that the 4.99 percent weightage given to perishables (out of the total 34.58 percent for food and non-alcoholic beverages) may need to be revised upward so that the economic team leaders can focus on an extremely disturbing statistic provided by the World Bank; notably, 44.7 percent poverty levels in Pakistan before the recent floods.
Core inflation, non-food and non-energy, declined by 0.1 percent in August 2025 — to 6.9 percent in August as opposed to 7 percent in July and 10.2 percent in August last year. This stickiness in core inflation may be linked to the possibility that the discount rate is unlikely to be reduced from the existing 11 percent by the Monetary Policy Committee after their interaction with the IMF. It may be recalled that the Finance Minister had projected a decline from the current rate, a decline that was cited as the reason for the downgrade in the mark-up component of current expenditure (contained at 50 percent in the current year).
The PBS calculated the Wholesale Price Index (WPI) at negative 0.74 percent July-August 2025 with 8.28 percent in the same period of the year before. The IMF in October 2024 announced its decision to extend a technical assistance (TA) to PBS on not only strengthening the capacity to calculate Government Finance Statistics but to develop a new Produce Price Index which, without doubt, would dramatically change the calculation of WPI.
The IMF’s TA was initiated in July and is scheduled for implementation till end June 2026. One would have to wait and see how successful the TA would be in reducing the shortcomings of our data or whether political considerations will continue to outweigh the capacity to take informed decisions based on accurate data.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.