Inflation rate hits multi-decade high of 27.3 percent in August

ISLAMABAD    -    Inflation rate skyrocketed to a multi-decade high of 27.3 per­cent in August due to the gov­ernment’s economic decisions including increasing prices of electricity and fuel as well as currency depreciation.

Inflation measured through Consumer Price Index (CPI) has broken all recent records mainly due to the govern­ment’s economic policies, in­ternational higher prices and the recent floods. Inflation touched 47-years high level of 27.3 percent in August. In July, annual CPI inflation was at 24.9 percent. On month-on-month basis, it has increased by 2.4 percent in August 2022, accord­ing to the latest data of Pakistan Bureau of Statistics (PBS).

“Everyone is asking if infla­tion is the highest ever? An­swer: Inflation is at a 47 (year) high following from 1975,” said Khaqan Hassan Najeeb, an economist and former adviser to the Ministry of Finance in his message to the media. In 2008, Pakistan’s inflation was 25.3% and inflation in April 1975 was 29.29%, he said.

The CPI inflation Urban in­creased by 26.2 percent on year-on-year basis in August 2022. Meanwhile, CPI inflation Rural increased by 28.8 per­cent on year-on-year basis in last month. The Sensitive Price Index (SPI), which gauges rates of kitchen items on weekly ba­sis, increased by 34 percent. On monthly basis, Wholesale Price Index (WPI) inflation on YoY basis increased by 41.2 percent in August 2022.

The economist believed that inflation would remain on the higher side in next couple of months mainly due the floods and recent government’s deci­sion to increase oil prices. On Wednesday, the government has once again increased the petroleum products prices de­spite decline in prices in inter­national market. On the other hand, the government is con­tinuously enhancing the elec­tricity tariff, which is also one of the factors behind higher in­flation rate. The recent floods in different parts of the coun­try have also caused damage to the standing crops as a result of which vegetables prices are likely to be stayed on the high­er side amid short supplies.

On annual basis, electricity tariffs rose by 123.3 percent, petrol 84 percent, masoor pulse by 118.6 percent, onion by 96.7 percent and gram by 88.8 per­cent. In one year, the price of cooking oil increased by 69.6 percent and ghee by 68.6 per­cent. Also, the price of gram pulse increased by 65.6 per­cent, chicken by 63.2 percent and mash pulse by 52.3 per­cent during this period. On an annual basis, the price of gram flour increased by 48.5 percent, vegetables by 41.6 percent and wheat by 39.8 percent.

The break-up of inflation of 27.26 percent showed that food and non-alcoholic bever­ages prices increased by 29.53 percent in August. Similarly, health and education charges went up by 11.89 percent and 9.99 percent, respectively. Sim­ilarly, prices of utilities (hous­ing, water, electricity, gas and fuel) increased by 27.57 per­cent in the last month. Mean­while, the prices of alcoholic beverages and tobacco went up by around 25.78 percent.

Prices of clothing and foot­wear increased by 17.63 per­cent and furnishing and house­hold equipment maintenance charges 21.86 percent. Rec­reational charges and those related to culture went up by 21.78 percent in the period under review, while amounts charged by restaurants and hotels by 27.43 percent in Au­gust 2022 as compared to the same month last year.

In urban areas, the food items which saw their prices increased during August 2022 included tomatoes (52.85 per­cent), pulse moong (15.27 percent), vegetables (13.44 percent), pulse mash (12.47 percent), pulse masoor (11.76 percent), eggs (7.53 percent), besan (6.5 percent), pulse gram (6.08 percent), gram whole (5.67 percent), potatoes (4.99 percent), beans (3.07 percent) and cooking oil (2.34 percent). In non-food com­modities, prices of electricity charges increased by (19.73 percent), liquefied hydrocar­bons (8.53 percent), ready­made garments (7.85 percent), construction input items (7.53 percent), stationery (7.29 per­cent), cleaning & laundering (6.73 percent), motor vehicle accessories (5.20 percent), cot­ton cloth (4.67 percent) and furniture & furnishing (2.33 percent). In urban areas, prices of following items reduced in­cluding fruits (19.98 percent), chicken (11.54 percent) and vegetable ghee (0.74 percent).

In rural areas, prices of fol­lowing commodities increased including tomatoes (30.02 percent), vegetables (19.62 percent), pulse mash (15.15 percent), pulse masoor (13.69 percent), pulse moong (12.71 percent), besan (9.71 percent), pulse gram (8.92 percent), condiments & spices (7.73 per­cent), eggs (6.55 percent), gram whole (6.29 percent), potatoes (5.51 percent), onions (4.26 percent), beans (3.57 percent), rice (3.57 percent) and meat (1.88 percent). In non-food commodities, electricity charg­es declined by (19.73 percent), liquefied hydrocarbons (6.97 percent), cleaning & launder­ing (3.42 percent), footwear (3.30 percent), stationery (2.97 percent), furniture & furnishing (2.83 percent), readymade gar­ments (2.40 percent) and cot­ton cloth (1.88 percent).