ISLAMABAD: Pakistan continues to face economic distress as its headline inflation hit a record high of 36.4% in April 2023. According to data released by the Pakistan Bureau of Statistics (PBS), on Tuesday, the Consumer Price Index has gone up by the record highest, on a YoY basis. This is the highest inflation rate recorded since 1965.
The rise in inflation is mainly attributed to a surge in food and energy prices, as well as a depreciation of the Pakistani rupee. The country has also been grappling with political turmoil and a perceived default risk. Furthermore, its bailout program with the International Monetary Fund (IMF) has been stalled since November 2022, and negotiations to resume funding have been ongoing since February 2023.
The situation has led to an increased risk of default, and international rating agencies have downgraded the country’s economic status. The State Bank of Pakistan (SBP) has implemented a contractionary monetary policy, and the possibility of another rate hike cannot be ruled out. The current economic and political instability in Pakistan has made life difficult for its citizens, with monthly inflation reaching an all-time high.
According to Bloomberg, Pakistan has the fastest-rising price in Asia surpassing even Sri Lanka, where inflation was measured at 35.3% in the previous month. The surge in inflation, amid ongoing political and economic turmoil, has made life more difficult for citizens.
The increase is significant compared to the previous month’s inflation of 35.4% and April 2022’s inflation of 13.4%. On a month-on-month basis, inflation increased to 2.4%.
The food group, which has a significant weight of 34.58% in the inflation reading, was the primary driver behind the increase, rising by over 48% from 176.38 in April 2022 to 261.17 in April 2023. The transport group also saw a substantial increase of 56.77% on a year-on-year basis.
It is important to note that experts had anticipated even higher inflation, with some predicting a 38% year-on-year inflation rate.
The Finance Division had also predicted that inflation would remain at an elevated level in the coming months due to food and energy price hikes, currency depreciation, and rising administered prices.
Rural areas were the hardest hit, with CPI inflation increasing to 40.7% year-on-year in April 2023, compared to 38.9% in the previous month and 15.1% in April 2022. In urban areas, CPI inflation increased to 33.5% year-on-year in April 2023, compared to 33% in the previous month and 12.2% in April 2022.
As per details the Sensitive Price Index (SPI) inflation on YoY increased to 42.1% in April 2023 as compared to an increase of 40.4% a month earlier and 14.2 % in April 2022. On a MoM basis, it increased by 2.7 % in April 2023 as compared to an increase of 5.8 % a month earlier and an increase of 1.5 % in April 2022.
The Wholesale price Index (WPI) inflation on YoY basis increased to 32.8 % in April 2023 as compared to an increase of 37.5 % a month earlier and an increase of 28.1 % in April 2022. On MoM basis, it decreased by 0.4 % in April 2023 as compared to an increase of 4.7 % a month earlier and an increase of 3.2 % in corresponding month of last year i.e. Apr 202.
Measured by non-food non-energy Urban increased to 19.5 % on (YoY) basis in April 2023 as compared to an increase of 18.6 % in the previous month and 9.1 % in April 2022. On (MoM) basis, it increased by 1.8 % in April 2023 as compared to an increase of 2.5 % in previous month, and an increase of 1.1 % in corresponding month of last year i.e. April, 2022.
Measured by non-food non-energy Rural increased to 24.9 % on (YoY) basis in April 2023 as compared to an increase of 23.1 % in the previous month and 10.9 % in April 2022. On (MoM) basis, it increased by 2.7 % in April 2023 as compared to an increase of 2.4 % in previous month, and an increase of 1.2 % in corresponding month of last year i.e. April 2022.
