Pushed by food and energy prices, Pakistan’s weekly inflation jumps to record 3.68 percent
KARACHI: Pakistan witnessed an unprecedented surge of 3.68 percent in weekly inflation during the last five working days, according to official data, as food and energy prices continued to spiral internationally.
Inflation measured by the Sensitive Price Index (SPI) increased by 3.68 percent from 3.38 percent recorded a week before. According to the Pakistan Bureau of Statistics, the weekly inflation on an annual basis recorded the highest increase of 37.67 percent.
Pakistan is currently experiencing high inflationary pressure due to a rapid depreciation of its national currency.
The government has also increased fuel and electricity prices multiple times since coming into power in April after ousting former prime minister Imran khan in a no-confidence vote.
Financial experts expect the country to face significant inflationary pressure during the current fiscal year.
“As per our expectations so far, the average inflation will remain between 18 and 19 percent during the current fiscal year [FY23],” Muhammad Sohail, CEO of Topline Securities, a Karachi-based brokerage firm, told Arab News on Sunday.
The previous administration of Khan, which originally negotiated a $6 billion bailout package with the International Monetary Fund (IMF) for Pakistan, decided to freeze petroleum and electricity prices by going against its commitment to the global lending agency.
However, the new coalition government uncapped the energy prices after assuming the office in April, ending subsidies and raising petroleum prices multiple times to secure the revival of the stalled IMF program.
The government’s tough economic decisions also had an impact on the weekly inflation determined after monitoring the rates of 51 basic products. The prices of 30 of these commodities increased during the week, seven decreased and 14 remained stable.
On a yearly basis, the weekly prices of diesel were up by 101.53 percent, petrol 94.15 percent, pulse masoor 99.14 percent, chicken 75.65 percent and five-liter cooking oil 74.81 percent among other food and nonfood items.
Pakistan’s monthly inflation rate measured by the Consumer Price Index (CPI) was recorded at 21.3 percent on a year-on-year basis in June 2022, the highest since 2008, as compared to an increase of 13.8 percent during the previous month and 9.7 percent in June 2021.
“The inflation will take time to cool down since the prices of petroleum products along with gas and electricity tariffs are likely to further increase,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment Company, told Arab News. “I believe inflation will remain high in near term and come down after December this year.”
The country’s central bank has already predicted that inflation will remain elevated during the current fiscal year and remain around 18 to 20 percent due to the large supply shock associated with the necessary reversal of fuel and electricity subsidies.
However, the bank hopes the inflation will sharply decline during the next fiscal year (FY24).