Pakistan's inflation as measured by the Consumer Price Index (CPI) rose to a two-year high of 13.37 per cent in April compared to the same month last year, the Pakistan Bureau of Statistics (PBS) said on Sunday.
Inflation accelerated from 12.7pc year-on-year (YoY) in March, marking a 1.61pc month-on-month rise in April.
This is the highest CPI inflation since January 2020 when it was 14.6pc.
According to data shared by the PBS, inflation in urban and rural areas rose by 1.6pc and 1.63pc, respectively.
Perishable food items led the inflationary trend with an increase of 29.57pc, followed by 28.34pc for transport and 15.02pc for non-perishable food items.
Other sectors that posted double-digit growth in prices included clothing and footwear (10.84pc), furnishing and household equipment maintenance (14.66pc), health (10.37pc), restaurants and hotels (14.57pc) and miscellaneous goods and services (12.76pc).
In addition, the prices of housing and utilities rose by 7.05pc, communication by 1.61pc, recreation and culture by 9.65pc and education by 8.36pc.
According to the PBS, food inflation in urban areas increased by 15.98pc YoY and in rural areas by 18.23pc.
In its monthly outlook report for April, the Ministry of Finance said the overall spike in inflation is on account of an increase in the prices of imported items, as the country is a net importer of items, especially crude oil, pulses and edible oil, which ultimately translates into domestic prices. The Russia-Ukraine war, supply chain disruption, and global demand recovery all contribute to price increases.
According to the report, inflation in Pakistan is driven by both external and internal factors. International commodity prices, especially oil and food prices are the main external contributors.
Further, exchange rate fluctuations also affect domestic prices. The movements of broad money are also considered a useful indicator because they reflect the influences of monetary and fiscal policies on the domestic price index. Finally, market expectations regarding these inflationary developments are also contributing factors.
The ministry forecast tough days ahead — including rising inflation, expanding current account deficit, higher fiscal deficit and dampening economic growth prospects — in the country owing to combination of internal and external challenges of unpredictable tenure.
"The domestic and international scenarios are changing which carry implications for the economic recovery. Meanwhile, inflationary and external sector pressures are creating macroeconomic imbalances in the economy," the report said.
Additional input from Reuters.