ISLAMABAD: The Consumer Price Index (CPI) inflation in July 2022 leaped to over a decade high of 24.9 per cent fueled by high energy and food prices.
According to the details, in June 2022, the CPI inflation was at 21.3%, whereas it was recorded at 8.4% in July 2021. On a month-on-month (MoM) basis, inflation increased by 4.3% in July 2022 as compared to an increase of 6.3% in the previous month and an increase of 1.3% in July 2021.
A devalued rupee against the US dollar has also compounded the situation resulting in eroding the purchasing power of the Pakistanis.
The State Bank’s interest rate is currently at 15% while there are rumors that the bank may further jack up the rate; economic pundits are however against the bank’s tight policy saying that it would negatively affect GDP growth.
Food inflation in July rose by 28.77% while utility charges and fuel were also up by 21.8% over a year ago. Transportation charges rose 64.73% against 8.24% in July 2021. Food and beverage prices increased 28.77% against 8.24% in July 2021, restaurants & hotels up 25% (8.5 pc on Jul 21), and alcoholic beverages & tobacco were costlier by 22.5% in July against 3.14% a year ago.
CPI inflation urban, increased by 23.6% on a YoY basis in July 2022 as compared to an increase of 19.8% in the previous month and 8.7% in July 2021. On a month-on-month basis, it increased by 4.5% in July 2022 as compared to an increase of 6.2% in the previous month and an increase of 1.3% in July 2021.
CPI inflation rural, increased by 26.9% on a YoY basis in July 2022 as compared to an increase of 23.6% in the previous month and 8% in July 2021. On a MoM basis, it increased by 4.2% in July 2022 as compared to an increase of 6.6% in the previous month and an increase of 1.4% in July 2021.
Utility charges including housing, water, electricity, gas, and fuel in July were costlier by 21.8% expensive against the same month last year of 9.2%. Furnishing and household equipment maintenance charges went up 19.7% against 9.8% last year, recreation and culture 15.4% (5.9% a year ago), clothing and footwear 14.57% (9.46pc), health charges 11.22% (8.6%), education charges up 9.8% against 2.04% in July 2021.
Interestingly, the Wholesale Price Index (WPI) increased by 38.5% during the month against the increase of 38.9% in June 2022 and an increase of 17.3% in July 2021. WPI inflation on a MoM basis increased by 2% in July 2022 as compared to an increase of 8.2% a month earlier and an increase of 2.3% in July 2021.
The weekly sensitive price indicator (SPI) also increased 28.2% in the month under review compared to an increase of 21.7% last month and 16.2% in the same month a year ago.
Over the previous month, electricity charges increased in July 2022 increased 39.35%, Motor Fuel 7.35%, construction input items 3.18%, washing soap, detergents 2.45%, cotton cloth 2.21%, liquefied hydrocarbons 1.99%, electrical appliances 1.48%, plastic products 1.40% and furniture & furnishing 1.30%.
The market expects that the fiscal year 2022-23 is expected to be a difficult year as headline inflation may settle in between 15-21% due to the risk tilted to the upside on the back of currency depreciation and rising fuel prices from levies and taxes as the government brings budgetary changes.
