IT is becoming difficult to put the inflation genie back into the bottle. New price data from the Pakistan Bureau of Statistics shows that monthly inflation edged up to 29.7pc last month from 24.5pc a year ago and 29.2pc a month back, owing to the upward adjustment of fuel charges in electricity tariffs and the increase in essential kitchen items. The continuous upward swing in the short-term weekly price data had already indicated as much, with second-round effects coming into play as manufacturers and sellers passed on the increase in energy rates to consumers. The State Bank of Pakistan, too, had hinted at sticky inflation in its December monetary policy statement due to the gas price hike. Overall, year-over-year CPI inflation has spiked by nearly 29pc in the first half of the ongoing fiscal year, from 25pc in the corresponding period the previous year.

According to the SBP, IMF and the government, the pace of increase in prices would slow down in the second half of the fiscal year to June due to the ‘high base effect’ of the last fiscal year, falling demand, easing of supply constraints and plunging global commodity rates. Their projections for the annual inflation rate, however, vary widely between 21pc to almost 26pc. These estimates compare favourably with the headline inflation of 29.6pc, recorded during 2022-23. Nevertheless, the inflation outlook faces multiple risks, ranging from potential currency depreciation to an upswing in international commodity prices, to a further increase in energy prices, as noted by the bank. Hence, inflation expectations of both consumers and businesses remain elevated in spite of some improvement of late. The monthly CPI inflation average has persisted at over 20pc since January 2021 — or double the last 10-year average of slightly over 10pc, underscoring the unprecedented rise in the cost of living in three years. Constantly rising food, housing, energy and transportation prices have especially burdened low- and middle-income households as wages stagnated. More people are more food insecure today than they were three years ago, not just because of shortages but also owing to the erosion of purchasing power. With elections just a few weeks away, no party has announced their plans to fix the causes of and control price inflation. Perhaps they are as clueless as ever; or just don’t care about the financial woes of ordinary people.

Published in Dawn, January 3rd, 2024