According to recent readings published by the Pakistan Bureau of Statistics, as the country battles an aggravating economic crisis, Pakistan’s inflation shattered all prior records in February when the consumer price index reached 31.5 percent (PBS).
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The monetary policy committee (MPC) meeting, which is set for Thursday, will directly reflect the effects of the high inflation rate. Experts predict that the committee will in fact increase interest rates.
That is the first time that inflation in Pakistan has exceeded the 31.5 percent level since records have been kept since July 1965. While it was still at 29% in April 1975, the inflation rate was comparable to what it was in February.
Inflation in Pakistan
The Wholesale Price Index (WPI), which tracks prices in the wholesale market, also increased significantly in February, jumping from 23.6% to 36.4% from the same month last year.
The PBS reported that both urban and rural areas saw an increase in the total inflation rate. Urban areas saw an increase in inflation of 28.8% in February while rural areas saw an increase of 35.6%. In February of last year, the inflation rate in urban regions was 11.5%, while it was 13.3% in rural areas.
On an annual basis, the food inflation rates in cities and villages skyrocketed to 47% and 41.9%, respectively. Food inflation in cities and villages was 14.3% and 14.6%, respectively, in February 2022. In contrast to 9.9% and 12.2% in the same month last year, the non-food inflation rate was recorded at 20.8% in urban regions and 25.3% in rural areas.
When compared to February of last year, food prices rose 16.14%. Within the food category, the costs of non-perishable food products increased by 2.32% on an annualised basis, while the prices of perishable goods increased by 16.14% year over year.
In terms of price, the south Asian nation has risen to 17th place in the globe and is quickly heading towards hyperinflation. So, the purchasing power of common people has drastically decreased as a result of the Pakistan Rupee’s value falling so far.
As Pakistan’s economy relies heavily on imports and has no way to cope with the devaluation of its native currency, food and gas prices have recently reached record highs. The mystery has further been exacerbated by the fact that the FX reserves are at an all-time low.
The publication of the sobering statistics coincided with the day that international credit rating agency Moody’s reduced Pakistan’s domestic and foreign currency credit ratings from Caa1 to Caa3 in its report.
The agency claimed that its opinion that Pakistan’s increasingly precarious liquidity and external position significantly raise default risks to a level corresponding with a Caa3 rating was the reason for the decision to downgrade the ratings.
The Pakistani government, which is presently negotiating to secure a $1 billion rescue package with the International Monetary Fund (IMF), is anticipated to suffer as a result of the grade.
The Pakistani government has put new tax policies into place in order to obtain IMF funds, per the organization’s advice. Securing the last payment, though, is hazy at the time.
INDEX-WISE INCREASE IN INFLATION
* Transportation: 0.55%
* Alcohol and tobacco use combined: 49.2%
* Culture and recreation: 48.05%
* Foods that are perishable: 47.59%
* Foods that don’t spoil quickly: 44.68 %
* Hotels and eateries: 34.54%
* Upkeep of furniture and appliances in homes: 34.04%
* Other products and services: 33.29 percent
* Wellness: 18.78%
* Apparel and shoes: 16.98%
* Housing and utilities: 13.58%
* Education: 10.79%
* Communication: 3.69%
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