Pakistan's inflation for 2020 not the highest in the world, SBP says clarifying Inflation Monitor

Published June 8, 2020
The State Bank of Pakistan said that inflation rates in Argentina, Iran, Nigeria and Turkey were higher than that of Pakistan's. — APP/File
The State Bank of Pakistan said that inflation rates in Argentina, Iran, Nigeria and Turkey were higher than that of Pakistan's. — APP/File

The State Bank of Pakistan (SBP) on Sunday said Pakistan's inflation for the year 2020 was not the highest in the world, clarifying what appears to be an erroneous point conveyed in its Inflation Monitor for April.

A day earlier, a report issued by the central bank's Inflation Monitor for April had a chart comparing Pakistan's inflation with a group of emerging and developed economies, accompanied by the text: “In global context, Pakistan witnessed highest inflation not only in comparison with the developed economies but also with emerging economies."

A screenshot of the relevant section from the SBP report
A screenshot of the relevant section from the SBP report

After several media outlets quoted the SBP inflation monitor to report that Pakistan had witnessed the highest inflation in the world in 2020, the central bank said in a statement on Twitter:

"A chart from our Inflation Monitor has generated erroneous headlines. It compares Pakistan’s inflation to a few developed and developing countries."

"While Pakistan did have a relatively elevated inflation rate so far in FY20, it is not true that it was the highest in the world," the central bank added.

SBP said inflation rates in Argentina, Iran, Nigeria and Turkey were higher than that of Pakistan's, noting that "since January, inflation in Pakistan has fallen sharply and much faster than in most other emerging markets".

A report published by Dawn on June 7, quoting the SBP's Inflation Monitor for April, said “Pakistan witnessed highest inflation not only in comparison with the developed economies but also with emerging economies”.

January witnessed 12-year high inflation at 14.6 per cent. In response to the rising prices, the SBP rose the interest rates to 13.25pc, it said.

However, with the emergence of coronavirus, the entire economic scenario was turned upside down as demand contraction lowered inflation forcing the SBP to cut down interest rates to 5.25pc within just three months, it added.

Detailed graphs accompanying the SBP’s Inflation Monitor had shown that Pakistan’s inflation, when compared to developing economies like China, Thailand, India, Bangladesh and Sri Lanka, had fallen since the pandemic.

The report also noted that the July-May inflation for the current fiscal year slipped below to SBP’s earlier projection of 11pc to 10.94pc.

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