Consumer Price Index (CPI)-based inflation hit 24.9% on a year-on-year (YoY) basis in July 2022, compared to an increase of 21.3% in the previous month and 8.4% in July 2021, revealed data released on Monday, as rising commodity prices and a weaker rupee took a toll on the economy that is under strain due to falling foreign exchange reserves.
CPI inflation
CPI inflation in urban areas increased by 23.6% on year-on-year basis in July 2022 as compared to an increase of 19.8% in the previous month and 8.7% in July 2021. On month-on-month basis, it increased by 4.5% in July 2022 as compared to an increase of 6.2% in the previous month and an increase of 1.3% in July 2021.
CPI inflation in rural areas increased by 26.9% on year-on-year basis in July 2022 compared to an increase of 23.6% in the previous month and 8.0% in July 2021. On a month-on-month basis, it increased by 4.2% in July 2022 as compared to an increase of 6.6% in the previous month and an increase of 1.4% in July 2021.
A 14-year high
“The yearly inflation is a 14-year high,” said JS Global in a comment. “The month’s CPI came higher than our estimates of 22%. In addition to quarterly housing uptick, key reasons for a higher inflation reading this month are higher petroleum product prices over previous months and higher food inflation,” it added.
Rising inflation has emerged as a key concern for Pakistan’s economy, already in the midst of an exchange-rate crisis and fears over its balance-of-payments position. Economic experts have earlier warned that the country will see food and energy prices rise further with the headline inflation likely to cross 24% in July.
The central bank has already projected inflation to remain elevated during the current fiscal year due to the significant supply shock.