Inflation hits 26.6pc in Oct 2022

ISLAMABAD: Fueled by historic high food inflation, Pakistan’s Consumer Price Index (CPI) inflation in October 2022 accelerated to 26.6 percent from 23.2 percent a month earlier. This latest reading is a little less than the 47-year high recorded in August this year, the Pakistan Bureau of Statistics (PBS) Tuesday reported.

Food inflation which occupies 34.58 weightage in the CPI basket, averaged 8.03 percent from 2011 until 2022, reaching an all-time high of 36.2 percent in October 2022 and a record low of negative 1.06 percent in September 2015.

The upward pressure on CPI came from the prices of house rent and utility charges (water, electricity, gas, and fuels) that were recorded at 11.92 percent against 3.4 percent in Sept 2022 and food inflation which arrived at 36.2 percent against 31.7 percent in September 2022.

Inflation is viewed as an ‘invisible tax’ on cash holders, eroding the purchasing power of money. The rupee’s shedding its value against the dollar further catalyzes the eroding purchasing power of millions of Pakistanis, pushing them under the poverty line as they are unable to make both ends meet.

Likewise, the core inflation (excluding the food and energy components) also increased. From 2010 to 2022, core inflation averaged 7.6 percent with the highest reading of 14.9 percent in the month under review [October 2022] and the lowest of 3.4 percent in Sept 2015. For the last several months, core inflation is moving north, which could be a challenge for the State Bank of Pakistan to maintain the existing discount rate.

According to the PBS data, since August 2021 CPI started increasing when it was at 8.4 percent, and then in November 2021, it increased to a double-digit 11.5 percent. In April 2022, CPI was 13.4 percent and this was the month inflation started galloping. In May 2022, it leaped to 13.8 percent, June 21.3 percent, July 24.9 percent, August 27.3 percent (record high), September 23.2 percent and now in October, it jumped to 26.6 percent. In the same month of last year (October 2021), the CPI was 9.2 percent.

According to the CPI bulletin, on a month-on-month basis, the inflation increased by 4.7 percent in Oct 2022 as compared to a decrease of 1.2 percent in the previous month and an increase of 1.9 percent in Oct 2021.

Since high inflation has turned into a ‘politically sensitive’ subject, it gives strength to the opposition demand that calls for early fresh general polls, as already Imran Khan has taken to the streets demanding for holding fresh elections.

It is to be noted that according to PBS, over a third of an average Pakistani household budget is being spent on purchasing food items and 23.6 per cent on house rent and utility charges (water, electricity, gas and fuels). In Oct 2022, food inflation rose by 36.2 percent and housing and utilities charges upped by 11.9 per cent over a year ago. Last month (September), food inflation was 31.7 percent and house rent and utilities were costly by 3.37 percent. Food inflation in one month shot up by 5.64 percent in October, while in September also it jumped by 5.8 percent.

Similarly, in Oct 2022, transportation charges were 53.43 per cent costlier, Alcoholic beverages and tobacco 34.6 per cent, restaurants and hotelling 30.38 per cent over a year ago.

Similarly, furnishing and household equipment maintenance charges went up 27.6 per cent and recreation and culture 23.65 per cent. Clothing and footwear costs also increased by 18.28 per cent, health charges by 16.23 per cent, and education charges by 10.88 per cent over October 2021.

Another indicator of inflation, wholesale price index (WPI), also increased by 32.6 per cent in October 2022 against an increase of 38.9 per cent in September 2022 and an increase of 21.1 per cent in Oct 2021. The weekly sensitive price indicator (SPI) also increased 24 per cent in the month under review as compared to an increase of 28.6 per cent last month and 15.3 per cent in Oct 2021.

According to Statistical office, the urban inflation increased 24.6 per cent yearly in October 2022 as compared to 21.2 per cent in September and 9.6 per cent in Oct 2021. The rural CPI also increased 29.5 per cent on a year-on-year basis in October 2022 as compared to an increase of 26.1 per cent in the previous month and 8.7 per cent in Oct 2021. Over the last month, the urban inflation increased by 5.4 per cent and the rural by 5.0 per cent.

Similarly, the urban core CPI (excluding food and energy components) increased by 14.9 per cent on a YoY basis in Oct 2022 against an increase of 14.4 per cent in the previous month and 6.7 per cent in Oct 2021. Likewise, the rural core CPI increased 18.2 per cent on a YoY basis in Oct 2022 as compared to 17.6 per cent in the last month and 6.7 per cent in Oct 2021.

In a month the prices of onions increased 67.7 per cent, tomatoes 40.73 per cent, fresh fruits 11 per cent, tea 9.8 percent, fresh vegetables 9.6 percent, wheat flour 8.9 percent, dry fruits 6.04 percent, dessert preparation 5.14 percent, chicken 3.98 percent, meat 2.1 percent, rice 1.56 percent, Pulse Moong 1.28 percent, fresh milk 1.2 percent and beans 1.02 percent over the previous month. However, the prices of masoor pulse declined 10.3 percent, mash pulse and cooking oil 2.7 percent each, mustard oil and gram pulse 1.8 percent each and gram whole and potatoes prices down by 1.5 percent each.

In the non-food sector, over the previous month, the charges for electricity increased 89.6 per cent, woolen cloth 6.15 percent, household servant 5 percent, construction input items 2.7 percent, household equipment 1.96 percent, solid fuel 1.74 percent, house rent 1.08 percent, and construction wages rates 0.3 percent over last month. However, liquified hydrocarbons price down 11.4 percent and motor fuel prices by 4.2 percent in a month.

On a year-on-year basis, the prices of tomatoes increased 219.34 percent, onions 165.7 percent, gram whole 70 percent, pulse gram 65 percent, besan 62.3 percent, mustard oil 61 percent and pulse masoor 61 percent each, fresh vegetables 59 percent, cooking oil 58 percent, mash pulse 55 percent, vegetable ghee 52.5 percent, pulse moong 50 percent, wheat 46 percent, tea 42 percent, rice 41 percent, wheat flour 37.4 percent, fresh milk 30 percent, meat 25.3 percent, potatoes 20.6 percent, fish 15.4 percent, chicken 12 percent over same month’s prices a year ago. However, in same period sugar prices reduced 11.8 percent and condiments & spices prices down by 11 percent.

Among non-food items, the charges for motor fuel on a year-on-year basis increased 65 percent, stationery 44.5 percent, washing soap/detergents/match box 41.5 percent, transport services 41 percent, motor vehicles 34.3 percent, construction input items 32 percent, motor vehicle accessories 31.3 percent, electricity charges 25 percent, cotton cloth 24.2 percent, household equipment 21.4 percent, solid fuel 20.9 percent and construction wage rates 12.7 percent.