Inflation continued to march upwards, as the Consumer Price Index (CPI)-based reading clocked in at 13.8% on a year-on-year basis in May 2022, compared to 13.4% in the previous month and 10.9% in May 2021, showed data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.

On a month-on-month basis, inflation increased by 0.44% in May 2022 compared to an increase of 1.6% in the previous month and an increase of 0.1% in May 2021. This takes 11MFY22 average inflation to 11.29% year-on-year compared to 8.83% in 11MFY21.

“May 2022 CPI inflation clocked in at 13.76% YoY which was slightly better than market expectations of 14%-14.5%,” said Mohammed Sohail, CEO Topline Securities.

Rising inflation has emerged as a key concern for the South Asian country’s economy, which is battling falling foreign exchange reserves amid a widening import bill. Last month, the State Bank of Pakistan (SBP), in its bid to tackle economic headwinds, raised the key interest by 150 basis points to 13.75%.

On the other hand, the incumbent government, aiming to revive the stalled International Monetary Fund (IMF) programme, announced to partially remove subsidies by increasing petroleum product rates by Rs30 per litre, a move which is expected to increase inflation.

Urban areas

Meanwhile, CPI inflation in urban areas increased 12.4% on a year-on-year basis in May 2022 as compared to an increase of 12.2% in the previous month and 10.8% in May 2021.

On a month-on-month basis, it increased by 0.3% in May 2022 as compared to increase of 1.6% in the previous month and increase of 0.2% in May 2021.

CPI inflation in rural areas increased by 15.9% on year-on-year basis in May 2022 as compared to an increase of 15.1% in the previous month and 10.9% in May 2021. On month-on-month basis, it increased by 0.6% in May 2022 as compared to increase of 1.6% in the previous month and a decrease of -0.03% in May 2021.

The Sensitive Price Index (SPI) inflation on YoY increased by 14.1% in May 2022 as compared to an increase of 14.2% a month earlier and an increase of 19.7% in May 2021. On MoM basis, it increased by 0.6% in May 2022 as compared to increase of 1.5% a month earlier and an increase of 0.8% in May 2021.

The story was originally published in Business Recorder on June 01, 2022.