Pakistan’s Consumer Price Index (CPI) -based inflation registered a whopping 26.6 per cent increase in October on a year-on-year (YoY) basis. The increase clocked at 4.7 per cent on a month-to-month basis as compared to a decrease of 1.2% in the previous month, according to data released by the Pakistan Bureau of Statistics on Tuesday.

“CPI inflation general, increased to 26.6 per cent on year-on-year basis in Oct 2022 as compared to an increase of 23.2 per cent in the previous month and 9.2 per cent in Oct 2021,” it said.

In June this year, the inflation reading crossed the 20 per cent mark, surging to a 47-year high level of 27.3 per cent in August on a year-on-year (YoY) basis.

Earlier, Ismail Iqbal Securities Limited told Business Recorder that expected headline inflation would witness a 4 per cent month-on-month increase in CPI Index during Oct 2022.

“We estimate inflation at 25.7% versus 23.2% in September. Overall, we expect FY23 average inflation at 22%. The sequential increase will be led by normalisation of electricity tariff, quarterly house rent revision, and higher perishable food prices,” the brokerage house had said.

“The impact would be diluted to some extent by reduction in petroleum prices,” it added.

Urban, rural inflation

The CPI inflation in urban areas was recorded at 24.6 per cent on year-on-year basis in October as compared to an increase of 21.2 per cent in the previous month and 9.6 per cent in Oct last year, said the PBS.

On month-on-month basis, it increased to 4.5% in Oct 2022 as compared to a decrease of 2.1% in the previous month and an increase of 1.7% in Oct 2021.

Moreover, CPI inflation in rural areas hit 29.5% on year-on-year basis in Oct 2022 as compared to an increase of 26.1% in the previous month and 8.7% in Oct 2021.

On a month-on-month basis, it increased to 5.0% in Oct 2022 as compared to an increase of 0.2% in the previous month and an increase of 2.2% in Oct 2021.

Rising inflation has emerged as a key concern for Pakistan’s economy, already in the midst of depleting foreign exchange reserves.

In October, the State Bank of Pakistan (SBP) in its Monetary Policy Committee (MPC) kept the policy rate unchanged at 15% as it felt that the existing monetary policy stance strikes an appropriate balance between managing inflation and maintaining growth in the wake of the floods.

“On the one hand, inflation could be higher and more persistent due to the supply shock to food prices, and it is important to ensure that this additional impetus does not spill over into broader prices in the economy. On the other, growth prospects have weakened, which should reduce demand-side pressures and suppress underlying inflation,” MPC said then.

On the other hand, the government, in a late-night development on Monday, announced to keep the price of petroleum products unchanged for the next 15 days.

PBS data suggested that transport, food, housing, and restaurant & hotel groups witnessed the highest pace of inflation in October.