ISLAMABAD: Pakistan’s headline inflation soared to 31.4 per cent in September from 27.4pc in the previous month as the country grappled with soaring energy prices that eroded the purchasing power of common people who are already struggling with poverty and unemployment.
Economists and analysts have blamed the government’s poor economic management and lack of reforms for the fresh spike in inflationary pressures.
Inflation, measured by the Consumer Price Index (CPI), increased month-on-month by 2pc in September, showed data released by the Pakistan Bureau of Statistics on Monday. An upward trend in inflation shows no signs of relenting.
A finance ministry report shows the upward adjustment in energy tariffs is further likely to intensify inflationary pressures in the coming months as these price adjustments are expected to place an additional burden on transportation costs, essential items, and services.
The year-on-year surge in inflation in September was also driven by significant increases in the prices of essential food items. Wheat flour saw a staggering rise of 81.29pc while rice experienced a rise of 64.71pc.
Additionally, chicken prices soared by 30.69pc, meat 18.84pc and sugar witnessed a substantial increase of 89.95pc. These notable spikes in the cost of items within the food basket contributed significantly to the overall inflation rate for September.
The gas prices saw a surge of 62.82pc, electricity charges 163.72pc and motor fuel 30.52pc on a year-on-year basis.
Inflation in the first quarter (July to September) surged to 29.04pc in FY24 from 25.11pc over the corresponding period of last year.
State Bank of Pakistan has projected 20-22pc average inflation for FY24 from 29.2pc in FY23. The SBP forecasts inflation due to the improved agricultural output, and administrative measures taken to curb volatility in the foreign exchange markets.
The International Monetary Fund has forecast the average CPI inflation for FY24 to be 25.9pc, a significant easing from the previous year’s 29.6pc. The federal government has set an annual inflation target of 21pc for the current fiscal year.
In FY23, the annual inflation remained at 29.18pc and surpassed its budgetary target of 11.5pc owing to the unprecedented rupee depreciation, increased domestic taxes, and rising global commodity prices. Inflation was recorded at 12.15pc in FY22.
Inflation has been rising since mid-2022 after the PML-N-led coalition government took harsh measures as demanded by the IMF to unlock stalled funding.
Non-perishable food items saw a 38.41pc increase in September, while perishable food items experienced a 4.37pc decline on a year-on-year basis.
Core inflation, which excludes food and energy prices, reached 18.6pc in urban areas and 27.3pc in rural areas. The government has raised the interest rate to the highest level in the country’s history, reaching 22pc.
In urban areas, food items whose prices rose the most in September compared to last year were sugar (89.95pc), wheat flour (81.29pc), condiments and spices (78.77pc), tea (73.03pc), gur (68.98pc), rice (64.71pc), beans (56.07pc), dry fruits (49.16pc), wheat products (48.78pc), beverages (45.81pc), wheat (40.97pc), milk powder (39.53pc), pulse mash (36.39pc), readymade food (35.29pc) and potatoes (34.55pc).
Published in Dawn, October 3rd, 2023