By Ariba Shahid
KARACHI, Pakistan (Reuters) – Pakistan’s consumer price index rose 27.5% year-on-year in January, the statistics bureau said on Wednesday, underscoring consistently high inflation amidst economic turmoil in the South Asian nation.
Pakistan’s economy has reeled from a sharp currency deprecation and foreign currency reserves have fallen to cover just three weeks of imports. Floods also devastated the country in August last year.
Prices were up 2.9% in January from the previous month, the Pakistan Bureau of Statistics (PBS) said in a statement. In December, the CPI rose 24.5% on year.
Arif Habib Limited, a Karachi-based investment firm said year-on-year inflation was the highest since May 1975, which saw a rise of 27.8%.
Mohammed Sohail, CEO at local brokerage firm Topline Securities, said the inflation statistics were expected after the Pakistani rupee’s fall over the last few days, the removal of subsidies and rising taxes.
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“This takes average inflation for the seven months of the current fiscal year to 25.4% compared to 10.3% in the same period last year,” Sohail said.
Urban core inflation rose 15.4% year-on-year, and 1.4% from December, while rural core inflation rose 19.4% compared to last year, and 1.5% compared to last month. Pakistan’s central bank highlighted rising core inflation as a concern and a reason for hiking policy rates.
Pakistan’s finance ministry said in its monthly outlook released on Tuesday that inflation for January was forecast in the range of 24%-28%, citing supply-side factors and economic and political uncertainty.
Food inflation increased by 42.9% year-on-year, and by 5% over the last month. While perishable items were up 61.6% over the last year, their prices fell 1.76% from December 2022, PBS said.
The country is negotiating with the International Monetary Fund to try to unlock bailout funds to assist its struggling economy.
But the IMF programme is expected to push Pakistan to increase power tariffs, which is expected to drive inflation further.
(Reporting by Ariba Shahid in Islamabad; editing by Sudipto Ganguly and Barbara Lewis)