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Pakistan Inflation Hardens in January On Food, Fuel Costs

WEB DESK February 1, 2023 0 1 min read

Because of the high cost of food and gasoline, Pakistan’s inflation increased more than anticipated last month, suggesting that the central bank will maintain borrowing costs high in its upcoming monetary review.

Consumer prices rose 24.50% in December from a year earlier, according to data released by statistics department Monday. That compares with a median estimate for a 24% gain in a Bloomberg survey and a 23.84% jump in November.

Food inflation quickened 35.5% year-on-year, while transport prices rose 41.2%, data showed. Clothing and footwear prices accelerated 17.1% and housing, water and electricity costs rose at 7%.

The reading indicates that price pressures are more persistent than previously thought. The country’s central bank raised interest rates by 625 basis points last year to keep prices in check, and it expects inflation to fall to the 5-7% range by the end of the next fiscal year, which ends in June. The monetary authority will hold its next policy review on Jan. 23.

Prices have stayed in double digits since Nov.2021, amid supply disruptions caused by Ukraine’s war and floods that ravaged the country. Authorities also increased fuel and power tariffs in order to meet key conditions for the IMF bailout.

Pakistan’s inflation is at a 48-year high as supplies are backed up in ports.
Bloomberg economists predict higher inflation and more rate hikes.
Price increases are the fastest since May 1975, and key rates are the highest in 24 years.In Pakistan, inflation rose to its highest level in nearly 48 years in January, as thousands of containers of food, raw materials, and equipment remained stranded at ports after the cash-strapped government reduced imports.

According to statistics department data released on Wednesday, consumer prices increased 27.55% year on year. This compares to a Bloomberg survey median estimate of a 25.9% increase and a 24.47% increase in December. According to central bank data, inflation is at its highest level since May 1975.