The Consumer Price Index (CPI)-based inflation clocked in at 24.5% in December on year-on-year (YoY) basis. On a month-on-month (MoM) basis, it increased to 0.5% in December 2022 as compared to an increase of 0.8% in the previous month and with no change in December 2021, showed data released by the Pakistan Bureau of Statistics (PBS) on Monday.

“CPI inflation general, increased to 24.5% on YoY basis in Dec 2022 as compared to an increase of 23.8% in the previous month and 12.3% in Dec 2021,” said the PBS.

“This takes 1HFY23 average inflation to 25.02% compared to 9.81% in 1HFY22,” said Arif Habib Limited (AHL) in a note.

In June 2022, the inflation reading had crossed the 20% mark, surging to an over 47-year high level of 27.3% in August 2022 on a year-on-year (YoY) basis.

The inflation reading comes in line with market expectations.

However, the Ministry of Finance in its monthly outlook for the month of December had said inflationary pressure has started easing out as the MoM CPI inflation declined from massive high of 4.7% in October 2022 to 0.8% in November.

“It can be expected that YoY CPI inflation in the month of December will maintain its declining tendency observed in November. It is expected that CPI inflation will remain in the range of 21-23%,” it said.

Rural and urban inflation

As per PBS, CPI inflation in urban areas increased to 21.6% on year-on-year basis in December 2022 as compared to an increase of 21.6% in the previous month and 12.7% in December 2021.

On MoM basis, it increased to 0.3% in December 2022 as compared to an increase of 0.4% in the previous month and an increase of 0.3% in December 2021.

Moreover, CPI inflation in rural areas increased to 28.8% on a year-on-year basis in December 2022 as compared to an increase of 27.2% in the previous month and 11.6% in December 2021.

On a MoM basis, it increased to 0.7% in December 2022 as compared to an increase of 1.3% in the previous month and a decrease of 0.5% in December 2021.

Economic woes

High inflation is just one of the woes currently putting Pakistan’s economy in distress with low foreign exchange reserves also causing worries over the country’s ability to meet its debt obligations.

While experts are urging the government to revive the stalled International Monetary Fund (IMF) programme, policymakers have one eye on inflation and another on political capital as general elections loom.

This article was originally published on the Business Recorder website.