Consumer price inflation in Pakistan climbed to a record 35.37 per cent in March as the government miserably failed to contain rising food rates, electricity tariff and fuel charges, experts say.
Referring to the latest data released by Pakistan Bureau of Statistics (PBS), analysts and economists said the March inflation numbers eclipsed February’s 31.55 per cent as food, beverages and transport prices surged up to 50% per cent year-on-year basis.
In a Bloomberg survey, economists estimate a median forecast at 34.8 per cent in March.
“The inflation number was the highest ever year-on-year increase recorded by the bureau since monthly data began in the 1970s. The consumer price index was up 3.72% in March from the previous month,” according to a spokesman at the bureau.
CPI for the month of Mar’23 clocked in at 35.4% YoY (+3.7% MoM). This is the highest YoY inflation since the available data i.e. July 1965. This takes 9MFY23 average inflation to 27.3% compared to 10.8% in 9MFY22.@PBSofficialpak @StateBank_Pak#Inflation #Pakistan #Economy #AHL pic.twitter.com/JaXWJUP8IW
— Arif Habib Limited (@ArifHabibLtd) April 1, 2023
Food inflation, transport weigh
Transport prices climbed up 54.94 per cent while food inflation quickened 47.15 per cent in March from a year earlier, data showed. Clothing and footwear prices accelerated 21.93 per cent and housing, water and electricity costs rose 17.49 per cent.
Core inflation, which was calculated after excluding the volatile energy and food prices, increased in March to 18.6 per cent in urban areas and 23.1 per cent in rural areas.
“Prices in urban and rural areas increased 32.97% and 38.88% year-on-year basis, respectively. Consumer prices have risen sharply over the past several months, with annual inflation staying above 20% since June last year,” according to the Pakistan Statistics Bureau.
Heading towards hyperinflation
Analysts believe Pakistan is now heading towards hyperinflation a situation when prices are out of control and in the territory of a 50 per cent surge.
“#Pakistan takes 12th place in this week’s inflation roundup. On Mar 23, I accurately measured inflation in #Pakistan at 64%/yr, over 2x the official rate of 31.6%/yr. The Pakistan Bureau of Statistics and Chief Statistician Naeem Zafar are publishing rubbish,” Steve Hanke, Professor of Applied Economics at the Johns Hopkins University in Baltimore, Maryland, tweeted.
Inflation to rise further
In its monthly economic update and outlook, the Pakistan’s Ministry of Finance has warned that inflation is likely to rise further due to a second-round effect of policy decisions made earlier to raise energy and fuel prices, the central bank’s policy rate, and the rupee’s depreciation to secure IMF funding.
The ministry also noted that the delay in finalising the IMF bailout was causing further economic distress.
“The economic distress resulting from delay of the stabilisation programme has exacerbated the economic uncertainty due to which inflationary expectations have remained strong,” the report said.
Economic slowdown ahead
The Ministry of Finance also noted that the average monthly economic indicator during the first eight months of the current fiscal year shoes a further slowdown in domestic economic activities. Analysts and economic experts predict 2% gross domestic product growth during the ongoing financial year 2022-23 ending June 30.
They said poor Pakistanis are feeling the brunt of the economic turmoil as at least 16 people have been lost their lives since the start of the holy month of Ramadan in stampedes at food distribution centres across the country
On Friday, 12 people including five women and three children, were killed in a stampede at a Karachi-based factory distributing Ramadan alms.
“At least 16 people were killed across Pakistan in stampedes at sites distributing free flour under a government-backed scheme to help families struggling with the soaring costs of basic staples,” Muzzammil Aslam, an economist, tweeted.
Looming food crisis
Authorities in Pakistan say the food crisis may grow worse in the coming days as much of the wheat in stock has been exhausted.
Annual food inflation in March was at 47.1% and 50.2% for urban and rural areas, respectively, according to the Pakistan Bureau of Statistics.
“The prices of all essential items have doubled, the poor people of Pakistan have been crushed by inflation,” former minister Hammad Azhar tweeted through PTI official handle.
In it’s monthly report, the Ministry of Finance said inflation would remain elevated due to multiple reasons.
Citing market frictions, the report attributed rising inflation rates to demand and supply gaps of essential items, exchange rate depreciation, and the recent upward adjustment in fuel prices.
“Record inflation in Pakistan since 1965. Who is to blame? There may be multiple factors including IMF conditions but the fact remains the indecisiveness & bad governance by PDM govt has only made the matters worse. I am afraid the worst is yet to come!,” Kamran Yousaf, the Islamabad-based journalist tweeted.
More from Tweets:
At least 16 people, including five women and three children, were killed in stampedes at flour distribution centers across Pakistan. The sites were set up to help ease the impact of soaring inflation, which has jumped to a record 35% https://t.co/M0eAm1AhTQ pic.twitter.com/Czj9ob6IgD
— Reuters (@Reuters) April 2, 2023
🇵🇰 Pakistan’s year-on-year inflation hit 35.37% in March – the highest in nearly five decades – as the government scrambled to meet IMF conditions to unlock a desperately needed bailout. Month-on-month inflation was 3.72%, according to government data.
➡️ https://t.co/ccY98784ve pic.twitter.com/3fjr4QJZZZ
— AFP News Agency (@AFP) April 1, 2023
— Asian Strategic Times (@AST_HQ) March 26, 2023