Islamabad remains one of most the expensive cities of Pakistan with an inflation rate recorded at 5.0 percent, the highest in Pakistan. On the other hand, inflation in Karachi remains the lowest at 2.1 percent as of June 2017.
Inflation is the rate at which the general level of prices for goods and services is raised. It is measured for ten big cities of the country usually, especially for the federal and provincial capitals.
There are 53 essential items measured to determine inflation level, besides expenses such as transportation and housing.
According to Inflation Monitor by State Bank of Pakistan (SBP), CPI Inflation on year-on-year basis in federal and provincial capitals of Pakistan showed a mixed trend during June 2017.
Among the provincial capitals, the city of Lahore witnessed the second highest percentage of inflation at 4.9 percent, followed by Peshawar at 3.9 percent and Quetta at 2.7 percent.
It is ironic to think that Karachi, being the economic hub of the country with a dense population, reported the lowest rate of inflation. Inflation in Karachi is less than half of the inflation of Islamabad where price-hikes can be controlled much easily due to its geographical size.
It should be noted that inflation is higher in capitals of different countries.
Karachi is also ranked as the fourth cheapest city in the world.
In May 2017, Lahore observed the highest inflation rate of 5.5 percent. Islamabad was a close second with 5.0 percent and Karachi with 4.4 percent. The inflation rate in Peshawar and Quetta was much lower at 3.7 percent and 3.2 percent respectively.
In the coming months, inflation will remain range bound. However this largely depends on the provincial and local governments and their policies.
SBP is projecting average CPI inflation in the range of 4.5 – 5.5 percent for the starting financial year 2017-18. This projection is explained by lower than anticipated increase in international oil prices, recent behavior of CPI inflation in June 2017, stable administered prices and lower inflationary expectations.
