Tuesday, June 25, 2024

Inflation Set to Break 50-Year Record in Pakistan

Inflation in Pakistan is breaking all records as the economy is deteriorating.

The projection for inflation in February 2023 from Ismail Iqbal Securities is 29.6 percent, although this is not expected to be the top since most of the effects of recent strong currency depreciation, changes in energy prices, and tax measures would start to show up in March 2023.

The predicted inflation rate for March 2023 is 33.6 percent.

It is important to note that the Consumer Price Index-based inflation rate in Pakistan surged to 27.6 percent on a year-over-year (YoY) basis in January 2023, up from 24.5 percent in the month before (December) and 13 percent in January 2022.

Pakistan’s inflation is on track to exceed the nearly 50-year record of 29.3 percent shown in April 1975.

According to the research, the Consumer Price Index (CPI) index is expected to rise by 2.8 percent on a quarter (MoM) basis, with the food (mostly chicken, rice, and edible oil), housing (LPG costs), and transportation (petroleum prices) segments leading the way.

Given supply shocks caused by shipments getting held at ports and import restrictions, the research anticipates core inflation to stay high at above 1 percent MoM. According to the research, this would probably result in core inflation of 15.6% in urban areas and 20% in rural areas.

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