Over a period of time, inflation is on the increase in the general price level of goods and services along with worrying economic stability. Economists recorded that in the economy the demand-supply imbalance creates inflation. Since the emergence of industrialisation and globalisation of markets, local also global factors are responsible for inflationary pressure.
It has been noted that the Russia-Ukraine war, disruptions in the global supply chain, overloaded ports, logistical challenges and strong merchandise demand in recent years have intensified inflationary pressures. Inflation grew in 2022 considerably in many countries around the world. According to data released by World of Statistics, Venezuela is at the forefront of the inflation problem, with a startling inflation rate of 398 per cent. Syria and Lebanon are not far behind at 252 per cent and 139 per cent, respectively. Furthermore, Turkey, one of the world’s rising economies, is now experiencing severe inflation, with a rate of 47.83 per cent. Egypt is dealing with an inflation rate of 36.5 per cent, while rates are between 11.3 per cent and 24.08 per cent in Nigeria, Hungary, Kazakhstan and Ukraine. This demonstrates that inflation is a threat to emerging markets everywhere.
| Core Inflation In Pakistan (%) (Base 2015-16) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Month | NFNE | Trimmed | ||||||
| Urban | Rural | Urban | Rural | |||||
| YoY | MoM | YoY | MoM | YoY | MoM | YoY | MoM | |
| Jan-23 | 15.4 | 1.4 | 19.4 | 1.5 | 20.9 | 1.5 | 27.8 | 2.1 |
| Feb-23 | 17.1 | 2.2 | 21.5 | 2.6 | 25.1 | 2.9 | 31.6 | 3.9 |
| Mar-23 | 18.6 | 2.5 | 23.1 | 2.4 | 28.7 | 2.7 | 35.0 | 2.9 |
| Apr-23 | 19.5 | 1.8 | 24.9 | 2.7 | 28.6 | 1.5 | 37.3 | 2.0 |
| May-23 | 20.0 | 1.2 | 26.9 | 2.5 | 30.5 | 1.5 | 38.8 | 2.0 |
| Jun-23 | 18.5 | 0.7 | 25.2 | 0.9 | 22.9 | 0.8 | 29.9 | 0.1 |
| Jul-23 | 18.4 | 1.2 | 24.6 | 1.2 | 21.7 | 1.9 | 28.7 | 2.4 |
| Aug-23 | 18.4 | 1.8 | 25.9 | 2.8 | 23.0 | 1.5 | 30.5 | 1.4 |
Pakistan’s scenario
Even though Pakistan’s inflation rate is quite high, it’s important to put it into perspective by comparing it to other nations. For instance, Argentina has an inflation rate of 113 per cent, which demonstrates how difficult it is to control price rises internationally. Our neighbouring country India has an inflation rate of 7.44 per cent in Asia, compared to Bangladesh’s 9.69 per cent. These numbers show that, to different degrees, inflation is having an impact on a number of the region’s nations. According to the Pakistan Bureau of Statistics, in the country inflation presently has been recorded as the following:
- CPI inflation General, increased to 27.4 per cent on a year-on-year basis in August 2023 as against to an increase of 28.3 per cent in the previous month and 27.3 per cent in August 2022. On a month-on-month basis, it grew to 1.7 per cent in August 2023 as compared to a rise of 3.5 per cent in the previous month and a rise of 2.4 per cent in August 2022.
- CPI inflation Urban, grew to 25.0 per cent on a year-on-year basis in August 2023 as against to an increase of 26.3 per cent in the last month and 26.2 per cent in August 2022. On a month-on-month basis, it grew to 1.6 per cent in August 2023 as compared to a rise of 3.6 per cent in the previous month and an increase of 2.6 per cent in August 2022.
- CPI inflation Rural, grew to 30.9 per cent on year-on-year basis in August 2023 as compared to a rise of 31.3 per cent in the previous month and 28.8 per cent in August 2022. On a month-on-month basis, it grew to 1.9 per cent in August 2023 as compared to a rise of 3.3 per cent in the previous month and an increase of 2.2 per cent in August 2022.
- SPI inflation on YoY grew to 27.9 per cent in August 2023 as against a rise of 29.3 per cent a month earlier and 34.0 per cent in August 2022. On MoM basis, it grew by 4.1 per cent in August 2023 as compared to a rise of 2.8 per cent a month earlier and a rise of 5.2 per cent in August 2022.
- WPI inflation on YoY basis grew to 24.3 per cent in August 2023 as against a rise of 23.1 per cent a month earlier and a rise of 41.2 per cent in August 2022. On MoM basis, it grew by 4.2 per cent in August 2023 as compared to an increase of 2.5 per cent a month earlier and a rise of 3.1 per cent in the corresponding month of last year i.e. August 2022.6. Measured by non-food non-energy Urban grew to 18.4 per cent on (YoY) basis in August 2023 as against a rise of 18.4 per cent in the previous month and 13.8 per cent in August 2022. On (MoM) basis, it grew by 1.8 per cent in August 2023 as against to a rise of 1.2 per cent in previous month, and an increase of 1.8 per cent in the same month of last year i.e. August, 2022.
- Measured by non-food non-energy Rural raised to 25.9 per cent on (YoY) basis in August 2023 as against to a rise of 24.6 per cent in the previous month and 16.5 per cent in August 2022. On (MoM) basis, it grew by 2.8 per cent in August 2023 as against to a rise of 1.2 per cent in the previous month, and a rise of 1.8 per cent in the corresponding month of last year i.e. August 2022.
Core inflation (Trimmed)
- Measured by 20 per cent weighted trimmed mean Urban grew to 23.0 per cent on (YoY) basis in August 2023 as against 21.7 per cent in the previous month and 21.4 per cent in August 2022. On (MoM) basis, it grew by 1.5 per cent in August 2023 as against a rise of 1.9 per cent in the previous month and a rise of 1.7 per cent in the corresponding month of last year i.e. August 2022.
- Measured by 20 per cent weighted trimmed mean Rural grew to 30.5 per cent on (YoY) basis in August 2023 as against 28.7 per cent in the previous month and 23.8 per cent in August 2022. On (MoM) basis, it grew to 1.4 per cent in August 2023 as against a rise of 2.4 per cent in the previous month and a rise of 1.8 per cent in the same month of last year i.e. August 2022.
Sources recorded that Pakistan was on the brink of default this summer before the International Monetary Fund (IMF) agreed to a lifeline deal on condition that the government cut subsidies that had cushioned living costs. Since then, the rupee has crossed a historic threshold of 306.69 to the dollar, whilst Islamabad has hiked petrol prices and electricity costs have spiked, sowing widespread discontent.