High Inflation at 29.7% Surprises Experts, Contrary to Slowdown Predictions
Published on: January 8, 2024.
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Inflation Surpasses Expectations, Reaching Record Highs in Pakistan
Inflation in Pakistan continues to rise, reaching a staggering 29.7% last month, driven by increasing prices of food and energy goods. This surge contradicts the expectations of the government, central bank, and market for a slowdown in the pace of price increases. The Pakistan Bureau of Statistics (PBS) reported that the Consumer Price Index jumped to 29.7% in December compared to the previous year.
In both urban and rural areas, inflation rates witnessed a significant increase. Prices of food and energy items continued to rise in both regions, with the price of fresh vegetables being three-fourths higher than the previous year. These price increases are unusual, as perishable food items usually decrease in price during the winter season.
Rapid increases in gas prices further contributed to the overall inflation rate, which rose to 31% in cities and 28% in rural areas. Non-food inflation also experienced a substantial increase in urban areas, reaching 32.4%, while rural areas saw an increase to 26.4%. Essential items like wheat flour, rice, tea, sugar, beverages, potatoes, and pulses witnessed a significant increase in their prices compared to a year ago.
Although core inflation, which excludes volatile energy and food prices, slowed down to 18.2% in urban areas and 25.1% in rural areas, it still remains far above the central bank’s interest rate. The inflation rate for the transport consumer price group rose by 28.6% despite a reduction in fuel prices.
Looking ahead, the government may struggle to meet its annual inflation target of 21%. The average inflation rate for the first six months of the current fiscal year was 28.8%, significantly higher than the official target. The government’s commitment to increase gas prices in January may hinder efforts to reduce inflation rates. Additionally, the State Bank of Pakistan’s policies have failed to contain inflation despite high interest rates.
It is crucial for rice exporters and rice suppliers in Pakistan to closely monitor the changing inflation landscape. For more information, visit https://www.hasrice.com for rice exporters and https://www.pakistanrice.com for Pakistan rice suppliers.
Source: The Express Tribune
