Consumer Price Index (CPI)-based inflation hit 21.3% on a year-on-year (YoY) basis in June 2022, compared to an increase of 13.8% in the previous month and 9.7% in June 2021, revealed data released on Friday, as rising commodity prices and a weaker rupee took a toll on the local economy.

“This is the highest monthly CPI reading since December 2008 when it was recorded at 23.3%,” Fahad Rauf, head of research at Ismail Iqbal Securities, told Business Recorder.

Meanwhile, on a month-on-month basis, CPI-based inflation increased by 6.3% in June 2022 as compared to an increase of 0.4% in the previous month and a decrease of 0.3% in June 2021, stated the Pakistan Bureau of Statistics (PBS).

May CPI inflation rises 13.8pc YoY

Rising inflation has emerged as a key concern for Pakistan’s economy battling a widening current account deficit due to a high import bill.

Pakistan’s current account deficit clocks in at $1.43bn in May 2022

Earlier in May, the State Bank of Pakistan (SBP), in its bid to tackle economic headwinds, raised the key interest by 150 basis points to 13.75%. The central bank back then said that as electricity and fuel subsidies are reversed, inflation is likely to rise temporarily and may remain elevated through FY23 before declining sharply during FY24.

The SBP is currently scheduled to hold its next Monetary Policy Committee meeting on July 7 to decide the key interest rate.

On the other hand, the incumbent government, aiming to revive the stalled International Monetary Fund (IMF) programme, also jacked up rates of petroleum products, a move which is expected to increase inflation further.

In a late-night development on Thursday, the government announced another hike in the prices of petroleum products, with the new ex-depot price of petrol going up to Rs248.74 per litre (after a hike of Rs14.85), and diesel to Rs276.54 (after a hike of Rs13.23).

Addressing a presser on Thursday, Finance Minister Miftah Ismail said that an increase in petroleum development levy by Rs10 on petrol and Rs4 on diesel was needed for revival of the IMF programme.

CPI inflation

Meanwhile, CPI inflation in urban areas increased by 19.8% on year-on-year basis in June 2022 as compared to an increase of 12.4% in the previous month and 9.6% in June 2021.

On month-on-month basis, it increased by 6.2% in June 2022 as compared to an increase of 0.3% in the previous month and decrease of 0.4% in June 2021.

CPI inflation in rural areas increased by 23.6% on year-on-year basis in June 2022 as compared to an increase of 15.9% in the previous month and 9.7% in June 2021. On month-on-month basis, it increased by 6.6% in June 2022 as compared to an increase of 0.6% in the previous month and decrease of 0.1% in June 2021.

The Sensitive Price Index (SPI) inflation on YoY increased by 21.7% in June 2022 as compared to an increase of 14.1% a month earlier and an increase of 17.6% in June 2021. On MoM basis, it increased by 6.2% in June 2022 as compared to increase of 0.6% a month earlier and decrease of (-)0.4% in June 2021.