In February, Pakistan’s Consumer Price Index (CPI) increased by 23.1% compared to the same month last year, marking the slowest annual inflation rate since June 2022, according to data from the Pakistan Bureau of Statistics released on Friday.
The country has been grappling with high inflation, reaching an all-time high of 38% on an annual basis in May of the previous year. This surge was partly attributed to new taxation measures imposed by the government to meet International Monetary Fund (IMF) requirements. The funding agreement with the IMF is set to expire on April 11.
On a month-on-month basis, the CPI for February remained unchanged, breaking the trend of monthly increases observed since the start of the fiscal year in July.
The Finance Ministry of Pakistan, in its monthly report, projected that inflation would range between 24.5%-25.5% in February, with an expected further decrease to 23.5%-24.5% in March as crop conditions and commodity supply improve.
In January, the annual CPI stood at 28.3%, making February’s 23.1% an improvement, partly due to base effects. Amreen Soorani, Head of Research at JS Global Capital, noted that the high base effect was anticipated and is now evident in the CPI. The respite this month is also attributed to a decline in food prices, despite increases in gas and petrol prices.
Samiullah Tariq, Head of Research at Pak Kuwait Investment Company, mentioned that the impact of a recent uptick in utility prices was diminishing, contributing to the slower pace of inflation.
In the face of these economic challenges, Pakistan’s central bank maintained its benchmark interest rate at 22% for the fifth consecutive policy-setting meeting in January and revised its full-year inflation projections upwards. The Governor of the State Bank of Pakistan attributed the increased inflation forecast for the fiscal year ending in June (23%-25%) to rising gas and electricity prices.
