Inflation Set to Break 50-Year Record in Pakistan

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Inflation in Pakistan is set to break the almost 50-year record of 29.3 percent witnessed in April 1975.

Ismail Iqbal Securities has put the estimate for February 2023 inflation at 29.6 percent but said that this is not likely to be the peak as most of the impact of recent sharp currency depreciation, energy price adjustments, and tax measures would reflect from March 2023. The estimate for March 2023 inflation is 33.6 percent.

The report puts the fiscal year 2022-23 (FY23) average at 27.7 percent compared to 12.1 percent in the previous fiscal year (FY21).

The report said that on a month-on-month (MoM) basis, the  Consumer Price Index (CPI) index is estimated to surge by 2.8 percent led by Food (mainly chicken, rice, and edible oil), Housing (LPG prices), and transport (petroleum prices) segments.

The report expects core inflation to remain elevated at above 1 percent MoM, given supply shocks as shipments are stuck at ports and imports are restricted. This would likely lead to urban core inflation of 15.6 percent and rural of 20 percent, the report added.

It is pertinent to mention here that Pakistan’s Consumer Price Index-based inflation increased to 27.6 percent on a year-on-year (YoY) basis in January 2023 as compared to an increase of 24.5 percent in the previous month (December) and 13 percent in January 2022.

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