February 2, 2023
ISLAMABAD – Annual inflation, measured by the Consumer Price Index (CPI), spiked to a decades-high level of 27.55 per cent in January, compared to 24.5pc in the previous month, as prices of food and transport continued to remain elevated.
Arif Habib Limited said it was the highest CPI figure since May 1975, when it stood at 27.77pc.
In January 2022, inflation was recorded at 13pc.
According to data released by the Pakistan Bureau of Statistics (PBS), inflation in urban and rural areas increased to 24.38pc and 32.26pc year-on-year, respectively.
Inflation increased 2.9pc on a monthly basis, PBS data showed.
The inflationary trend was driven by a double-digit increase in almost all sub-indices, especially food and transport, prices of which have rapidly increased.
Index-wise increase in inflation YoY:
- Perishable food items: 61.63pc
- Recreation and culture: 44.14pc
- Non-perishable food items: 40.34pc
- Transport: 39.1pc
- Alcoholic beverages and tobacco: 36.33pc
- Restaurants and hotels: 30.1pc
- Furnishing and household equipment maintenance: 29.9pc
- Miscellaneous goods and services: 28.69pc
- Health: 18.73pc
- Clothing and footwear: 16.76pc
- Education: 10.58pc
- Housing and utilities: 7.83pc
- Communication: 1.57pc
The CPI figure was higher than the government’s expectation of 26pc, which itself was more than double the budgeted 11.5pc target.
“The Consumer Price Index (CPI) inflation on a year-on-year basis for January is forecast in the range of 24-26pc,” said the Ministry of Finance in its Monthly Economic Update & Outlook, adding that the recent political and economic uncertainties both were causing inflationary expectations upward.
The ministry also made an upward revision in its inflation forecast to 24-26pc for the year, from 21-23pc it had estimated in December.
Late last month, the government removed an unofficial cap on the USD-PKR exchange rate, as a result of which the local currency lost Rs38.74 between Jan 26-30. Separately, it also hiked petrol prices by Rs35 a litre. The full impact of these measures is yet to be reflected in the CPI.