Inflation in March is expected to break further records and could clock in above 34%, amid announced macro adjustments.
JS Global, in a report released on Monday, said the Consumer Price Index (CPI) based inflation for March 2023 is expected to clock in at 34.34% YoY, the highest since at least 1965, with a month-on-month increase of 2.95%.
“Higher gas prices amid long-overdue adjustment in gas tariffs and higher cigarette prices over newly implemented increased FED (Federal Excise Tax) are among important reasons,” the research said. “Higher food is the usual culprit, but there are other culprits as well.
The statement said, “This would be the third consecutive month of more than 250bp MoM inflation increase, which normally hovers around an average of around 80 to 100bp.
According to JS Global’s analysis, mid-month POL product price increases were taken into account when calculating inflation in February, and applying the same methodology to this month’s inflation numbers would raise the anticipated CPI to 34.5%.
As you may recall, the government announced a rise in POL prices of up to Rs13 a litre in mid-March. Transport prices are collected for CPI calculations from the 7th to the 10th of each month in accordance with PBS.
Also, it stated that consumer prices will continue to rise and that they would likely approach 25% this month, exceeding the previous peak set 14 years ago.
The steep increases in energy prices and the recent depreciation of the Pakistani rupee (PKR) are likely to blame for the second round of inflation in various components of the inflation index.
In February 2023, CPI-based inflation in Pakistan, which is still experiencing one of its worst economic crises, reached 31.5% on an annual basis, up from 12.2% in February 2022 and a surge of 27.6% in January. Due to a more than 45% increase in the cost of food, beverages, and transportation, this was the highest yearly rate in almost 50 years.
SBP increases the standard interest rate by 300 bps to 20%
