Inflation continued to take its toll as Consumer Price Index (CPI)-based reading hit a 24-month high at 13% on a year-on-year basis in January 2022, compared to an increase of 12.3% in the previous month and 5.7% in January 2021, showed data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.
“This is the highest inflation in 24 months. In January 2020 CPI reading came at 14.6%," said a note by brokerage house Arif Habib Limited (AHL).
“This takes 7MFY22 average inflation to 10.26% YoY compared to 8.19% in 7MFY21,” it added.
Inflation has remained a thorny issue for the incumbent government, as the economy faces multiple battles including a surge in global commodity prices especially oil.
In the international market, oil prices edged higher on Tuesday, trading near seven-year highs hit last week, as investors bet supplies will stay tight, with a limited production hike by major oil producers and a strong post-pandemic recovery in fuel demand.
Meanwhile, Pakistan's central bank in its previous Monetary Policy Committee (MPC) meeting, announced to keep the key interest rate unchanged at 9.75% as it was of the view that demand-moderating measures are gaining traction and have improved the outlook for inflation.
However, it expected that headline inflation will likely remain high “in the near term due to base effects and energy prices”.
Inflation reading
CPI inflation in urban areas increased by 13.0% on year-on-year basis in January 2022 as compared to an increase of 12.7% in the previous month, and 5.0% in January 2021. On a month-on-month basis, it increased by 0.9% in January 2022 as compared to a decrease of 0.5% in the previous month and a decrease of 0.3% in January 2021.
December: Inflation reading comes in at 12.3%, highest in 22 months
CPI inflation in rural areas increased by 12.9% on year-on-year basis in January 2022 as compared to an increase of 11.6% in the previous month and 6.6% in January 2021. On a month-on-month basis, it increased by 0.9% in January 2022 as compared to decrease of 0.5% in the previous month and a decrease of 0.3% in January 2021.
The Sensitive Price Index (SPI) inflation on YoY increased by 20.9% in January 2022 as compared to an increase of 20.9% a month earlier and an increase of 7.7% in January 2021. On MoM basis, it decreased by 0.8% in January 2022 as compared to decrease of 0.4% a month earlier and a decrease of 0.8% in January 2021.