Headline inflation continued to bite as Consumer Price Index (CPI)-based reading hit a 22-month high at 12.3% on a year-on-year basis in December 2021, compared to an increase of 11.5% in the previous month and 8.0% in December 2020, showed data released by the Pakistan Bureau of Statistics (PBS) on Saturday.
The reading is the highest inflation in 22 months -- in February 2020 CPI reading came at 12.40% -- said brokerage house Arif Habib Limited in a comment.
“This takes 1HFY22 average inflation to 9.81% YoY compared to 8.63% in 1HFY21,” it added.
Inflation has remained a thorny issue for the incumbent government, as the economy faces multiple battles including global commodity prices leading to a rising import bill, widening trade gap, and less-than-desired foreign exchange inflows.
High inflation has already resulted in the central bank increasing the discount rate by 100 basis points in its previous Monetary Policy Committee meeting, taking it to 9.75%. Since September last year, the central bank has increased the discount rate by a cumulative 275 basis points.
Meanwhile, CPI inflation in urban areas increased by 12.7% on year-on-year basis in December 2021 as compared to an increase of 12% in the previous month, and 7.0% in December 2020. On month-on-month basis, it increased by 0.3% in December 2021 as compared to increase of 2.9% in the previous month and a decrease of -0.3% in December 2020.
CPI inflation in rural areas increased by 11.6% on year-on-year basis in December 2021 as compared to an increase of 10.9% in the previous month and 9.5% in December 2020. On month-on-month basis, it decreased by 0.5% in December 2021 as compared to increase of 3.1% in the previous month and a decrease of 1.2% in December 2020.
The Sensitive Price Index (SPI) inflation on YoY increased by 20.9% in December 2021 as compared to an increase of 18.1% a month earlier and an increase of 9.1% in December 2020. On MoM basis, it decreased by 0.4% in December 2021 as compared to increase of 3.6% a month earlier and a decrease of 2.7% in December 2020.