KARACHI: Pakistan’s inflation quickened in January as thousands of containers of food items, raw materials and equipment are stuck in ports after the cash-strapped government curtailed imports.
According to a report by Bloomberg, consumer prices rose 27.55% from a year earlier, according to data released by statistics department on Wednesday. That compares with a median estimate for a 25.9% gain in a Bloomberg survey and a 24.47% jump in December.
Arif Habib Limited said it was the highest CPI figure since May 1975, when it stood at 27.77pc.
CPI for the month of Jan’23 clocked-in at 27.55% YoY (+2.88% MoM). This is the highest YoY inflation after May 1975 (27.77%).This takes 7MFY23 average inflation to 25.40% compared to 10.26% in 7MFY22.@PBSofficialpak @StateBank_Pak #PBS #Inflation #Pakistan #Economy #AHL pic.twitter.com/P2eyxSBbl2
— Arif Habib Limited (@ArifHabibLtd) February 1, 2023
The latest reading comes a week after the central bank increased its benchmark rate to the highest in more than 24 years to help stabilize an economy that’s spiraling deeper into crisis amid supply shortages, sky-high prices and funding crunch. Pakistan’s troubles worsened after last year’s devastating floods that amplified the impact of political turmoil and the fallout from the war in Ukraine.
About 6,000 containers are stranded in ports, including thousands of tons of poultry feed ingredients that pushed chicken prices to a record earlier this year. The logjam is aggravating inflation that has lingered above 20% since June as the government limited imports amid scare funds.
Foreign-currency reserves have dwindled to a nine-year low of $3.68 billion, equivalent to less than a month of imports while local banks have been refusing to issue letters of credit, leading to a standstill that puts businesses at risk of shutting down.
The local currency plunged to a record low this year after money exchangers abolished the limit on the dollar-rupee rate in the open market to curb the black market. A more market-determined currency may help Pakistan secure more money from the International Monetary Fund, whose loan disbursement to the nation has seen multiple delays.
Index-wise increase in inflation YoY:
- Perishable food items: 61.63pc
- Recreation and culture: 44.14pc
- Non-perishable food items: 40.34pc
- Transport: 39.1pc
- Alcoholic beverages and tobacco: 36.33pc
- Restaurants and hotels: 30.1pc
- Furnishing and household equipment maintenance: 29.9pc
- Miscellaneous goods and services: 28.69pc
- Health: 18.73pc
- Clothing and footwear: 16.76pc
- Education: 10.58pc
- Housing and utilities: 7.83pc
- Communication: 1.57pc
