Inflation Set to Break All Previous Records in Pakistan

Pakistan’s Consumer Price Index-based inflation is set to continue its record-breaking run and is projected to reach 35.8 percent year-on-year in March.

According to a report by Ismail Iqbal Securities, the month-on-month (MoM) increase in inflation is estimated at 4 percent, following a 4.3 percent increase last month (February). The increase on a MoM basis is mainly due to higher food prices and the impact of the mini-budget.

Core inflation is also expected to remain above 2 percent MoM, reflecting the impacts of rupee devaluation, import restrictions, and second-round effects of the increase in energy prices. The report estimates rural core at 23.2 percent against 21.5 percent in February, and urban at 17.9 percent against 17.1 percent in February.

The report expects inflationary pressures to persist in April 2023 as most of the impact of Ramadan-related food prices increase, and removal of wheat subsidy, is yet to reflect in the CPI data. The report puts April 23 estimate for inflation at 38.3 percent.

It is pertinent to mention here that Pakistan’s Consumer Price Index-based inflation increased to a historic high of 31.6 percent on a year-on-year (YoY) basis in February 2023, the highest-ever CPI increase based on data available from July 1965.

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