Pakistan’s 50-year high inflation spikes to 35.37 pc in March

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Fresh inflation reading augments prospects of further rise in interest rates scheduled to be announced on Tuesday
ISLAMABAD
Annual inflation, measured by the Consumer Price Index (CPI), soared to a record high of 35.37 percent in March, compared to 31.55pc in the previous month, driven by massive increases in food and transport prices in Pakistan.
The Pakistan Bureau of Statistics (PBS) spokesman said the number was the highest in nearly five decades, as the government scrambled to meet International Monetary Fund (IMF) conditions to unlock a desperately needed bailout.
Month-on-month inflation was 3.72 percent, according to government data released Saturday, while the average inflation rate for the past year was 27.26 percent.
“This is the highest ever inflation recorded in the data we have,” he added.
Higher prices of food, cooking oil, and electricity pushed up the index, the bureau said. The South Asian nation has been in economic turmoil for months with an acute balance of payments crisis, while talks with the IMF to secure bailout funding have stalled.
“The way inflation is rising, I believe a famine-like situation has been simmering,” said Shahida Wizarat, a Karachi-based analyst.
In March 2023, urban Consumer Price Index (CPI) inflation rose to 33.0% year-on-year, compared to 28.8% in the previous month and 11.9% in March 2022. Month-on-month, it increased to 3.9%, compared to 4.5% in the previous month and 0.7% in March 2022.
Rural CPI inflation also increased in March 2023 to 38.9% year-on-year, compared to 35.6% in the previous month and 13.9% in March 2022. On a month-on-month basis, rural CPI inflation rose to 3.5%, compared to 4.0% in the previous month and 1.0% in March 2022.
Inflation is expected to stay at “elevated” levels, the Finance Ministry said, “owing to market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel,”
For the week under review, SPI was recorded at 249.66 points against 250.66 points registered last week and 171.82 points recorded during the week ended March 31, 2022.
Out of 51 items in the SPI basket, prices of 23 items soared while those of 11 items decreased, however, rates of 17 items remained unchanged.
The Wholesale Price Index (WPI), which monitors prices in the wholesale market, also rose sharply to 37.5% in March compared to 23.8% in the same month a year ago.
PBS data noted decrease in prices of onions (15.10 percent), chicken (11.96 percent), tomatoes (10.26 percent), LPG (1.35 percent), cooking oil 5 litre (1.24 percent), vegetable ghee 1kg (1.07 percent), vegetable ghee 2.5kg (0.77 percent), pulse gram (0.42 percent), firewood (0.35 percent), pulse moong (0.22 percent) and mustard oil (0.17 percent).
The items whose prices increased the most over the same week a year ago were cigarettes (165.88pc), onions (127.07pc), wheat flour (123.22pc), gas charges for Q1 (108.38pc), diesel (102.84pc), tea Lipton (98.08pc), eggs (96.67pc), bananas (94.89pc), rice basmati broken (83.65pc), petrol (81.17pc), rice Irri-6/9 (79.17pc), pulse moong (67.85pc) and potatoes (56.44pc).
The inflation situation has worsened to its worst, steeping the masses, whose purchasing power has eroded by leaps and bounds, into misery, as the price of almost every edible item has gone through the roof over a period of months.
Analysts believe Pakistan is now heading towards hyperinflation — a situation when prices are out of control and in the territory of a 50% surge.
The federal and provincial governments are even unable to ensure steady essential food supplies.
The prices are soaring at a time when the economy has slowed down significantly and poverty, as well as unemployment, are spiking.
The prices of a majority of consumer goods remained out of the reach of the people, and a major surge was witnessed in rural areas where income levels were already low.