Pakistan’s Inflation to Remain Above 28.5% in FY23 Amid Global Crisis

Inflation forecasts have been revised upwards and will remain at 28.5 -29.0 percent against the target of 11.5 percent for the outgoing fiscal year, revealed the Economic Survey 2022-23. The survey noted that the global inflationary pressure intensified during recent years while during the last couple of months, the global supply chain has shown little improvement. The international commodity price outlook is favorable which may offset the negative impact of currency depreciation. In addition, the better crop outlook due to timely measures i.e. Kissan Package, expected political stability and the stable exchange rate would help to achieve price stability. The inflation rate in the medium term will be expected to normalize due to improvement in the agriculture sector and expected favorable global and domestic environments. The headline inflation, measured by the growth in CPI, is recorded at 28.2 percent during July-April fiscal year 2023 as against 11 percent during the same period last year. The increase in inflation was broad-based with all categories recording higher inflation except for communication services. Across product categories, inflation for transportation, given its direct link to fuel prices, registered a sharp increase of 52.8 percent as against 19.4 percent during July-April fiscal year 2022. Similarly, housing, water, electricity, gas, and other fuel have recorded an increase of 13.6 percent as against 11.0 percent during the same period last year. The increase in domestic energy prices was attributed to rising global oil prices, exchange rate depreciation, and adjustment in energy tariffs/petroleum levy. During the first ten months of the current fiscal year, inflationary pressure has persisted. It is the 18th consecutive month since November 2021 witnessing double-digit inflation. Consumer Price Index (CPI) in April 2023 stood at 36.4 percent on a year-on-year (YoY) basis which was higher than 35.4 percent in the previous month and 13.4 percent in April 2022. On average, CPI inflation was recorded at 28.2 percent during July-April FY2023 as against 11.0 percent in the same period last year.