Pakistan: Inflation 13% in January, the Most in Two Years

Data issued by the Pakistan Bureau of Statistics (PBS) on Tuesday showed that inflation continued to take its toll as the Consumer Price Index (CPI)-based reading reached a 24-month high of 13 percent annually in January 2022, compared to a rise of 12.3 percent in the preceding month and 5.7 percent in January 2021.

“Inflation has reached its highest level in 24 months.” According to a letter from the trading company Arif Habib Limited, the CPI figure for January 2020 was 14.6 percent (AHL).

“As a result, average inflation in 7MFY22 is 10.26 percent year on year, compared to 8.19 percent in 7MFY21,” the report continued.

Inflation has been a source of contention for the current administration, as the economy grapples with a variety of challenges, including a spike in global commodity prices, particularly oil.

With supplies expected to remain tight because of a restricted output increase by major oil producers and a substantial post-pandemic rebound in gasoline consumption, oil prices moved higher on Tuesday, trading near seven-year highs reached last week.

Meanwhile, at its most recent Monetary Policy Committee (MPC) meeting, Pakistan’s central bank declared it will maintain the key interest rate at 9.75 percent because it believes that demand-moderating measures are gaining momentum and have improved the outlook for inflation.

It predicted that headline inflation would likely continue to be high “in the short future due to base effects and energy costs.”

The reading on inflation

According to the Consumer Price Index (CPI), inflation in urban areas climbed by 13.0 percent annually in January 2022, compared to a rise of 12.7 percent the previous month and 5.0 percent in January 2021, respectively. From one month to the next, it climbed by 0.9 percent in January 2022, following a fall of 0.5 percent the month before and a decline of 0.3 percent the month before that.

This month’s inflation estimate comes in at 12.3 percent, which is the highest number in 22 months.

According to the Consumer Price Index (CPI), inflation in rural regions climbed by 12.9 percent on an annual basis in January 2022, compared to a rise of 11.6 percent in the previous month and 6.6 percent in the previous year. According to the most recent available data, it climbed by 0.9 percent in January 2022, after declining by 0.5 percent the month before and declining slightly by 0.3 percent the month before that in January 2021.

Inflation measured by the Sensitive Price Index (SPI) grew by 20.9 percent year on year in January 2022, compared to an increase of 20.9 percent a month earlier and an increase of 7.7 percent in January 2021, according to the index. Based on month-over-month changes, it declined by 0.8 percent in January 2022, as opposed to a reduction of 0.4 percent one month earlier and an increase of 0.8 percent in the previous month.