The statistics bureau said annual consumer price inflation reached 24.9 percent in July, up from 21.3 percent in June and the highest in 14 years.
By Staff Reporter
KARACHI: July inflation accelerated to its highest in 14-year on runaway food prices, stoked by a battered rupee, raising prospects of more rate hike by central bank later this month, official data showed on Monday.
Consumer prices rose 24.93 percent in July from a year earlier, according to data released by the Pakistan Bureau of Statistic. That compares with a a 21.3 percent jump in June.
On a month-on-month basis, CPI-based inflation increased 4.3 percent in July 2022 as compared to an increase of 6.3 percent in the previous month, and an increase of 1.3 percent in July 2021.
Abdul Azeem, head of research at Spectrum Securities Ltd. said inflation will keep on rising as the government eliminates subsidies and keep energy prices elevated under a commitment to the International Monetary Fund (IMF) to secure $1.2 billion loan tranche.
“The uptrend will continue for a few months as electricity hike is still not reflected and there will be an increase in gas prices too.”
Food inflation in July quickened to 28.77 percent year-on-year while transport surged 64.73 percent.
The government had raised petroleum products and electricity prices by 50 percent in the past few months to win back the IMF bailout. The electricity price hike approved last week has yet to impact inflation.
Pakistan’s rupee fell more than 14 percent in July — the worst month since at least 1989 — amid a dollar shortage and concern that political uncertainty may delay the IMF bailout.
Authorities are banking on the IMF loan to stave off a potential default. The board of the multilateral lender is expected to meet later this month for a final approval after the staff level agreement.
CPI inflation in urban areas increased by 23.6 percent on year-on-year basis in July 2022 as compared to an increase of 19.8 percent in the previous month and 8.7 percent in July 2021. On month-on-month basis, it increased by 4.5 percent in July 2022 as compared to an increase of 6.2 percent in the previous month and an increase of 1.3 percent in July 2021.
CPI inflation in rural areas increased by 26.9 percent on year-on-year basis in July 2022 compared to an increase of 23.6 percent in the previous month and 8.0 percent in July 2021. On a month-on-month basis, it increased by 4.2 percent in July 2022 as compared to an increase of 6.6 percent in the previous month and an increase of 1.4 percentin July 2021.
Analysts said inflation will get hotter yet in months ahead, prompting the hike policy rate further.
Pakistan’s central bank will also keep a watch on inflation trajectory when it holds its next monetary policy review on Aug. 22. State Bank of Pakistan has raised rates by 525 basis points since the start of the year to tame prices.
JS Global in a comment said the yearly inflation is a 14-year high.
“The month’s CPI came higher than our estimates of 22 percent. In addition to quarterly housing uptick, key reasons for a higher inflation reading this month are higher petroleum product prices over previous months and higher food inflation,” it added.
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