Pakistan’s annual inflation reached a staggering 37.97% year-on-year in May, marking a continued escalation in the country’s highest-ever inflation, according to the statistics bureau.
The figure surpasses the finance ministry’s projection of 34-36% for May, as mentioned in its monthly economic update and outlook. The ministry had anticipated a decline in inflation after reaching its peak this month, attributing it to the easing of international commodity prices that would offset the adverse effects of currency depreciation.
The finance ministry listed several factors contributing to the rising price levels, including flood damages, disruptions in supply chains, devaluation resulting from macroeconomic imbalances, and political uncertainty. April had already witnessed the highest percentage of year-on-year inflation recorded at 36.4%.
The month-on-month increase in May stood at 1.58%, with the statistics bureau highlighting significant price hikes in vegetables, pulses, and chicken.
Pakistan has experienced a consistent upward trend in inflation since the beginning of the year, following government measures taken as part of fiscal adjustments demanded by the International Monetary Fund (IMF) to unlock delayed funding that has yet to be disbursed.
Inflation in Pakistan is measured using the Consumer Price Index (CPI), which tracks a basket of products and services. The CPI consists of 12 major components with varying weights.
Notably, the highest year-on-year increases were observed in alcoholic beverages and tobacco (123.96%), recreation and culture (72.17%), and transport (52.92%), according to data released by the statistics bureau.
Within the food category, the items with the most significant price increases in May compared to the previous year were cigarettes, potatoes, wheat flour, tea, wheat, eggs, and rice. In the non-food category, notable price increases were observed in items such as textbooks, stationery, motor fuels, washing soaps, detergents, and matchboxes.
The Consumer Price Index recorded a year-on-year increase of 35.09% for urban areas and 42.18% for rural areas in May. With the recent surge in CPI, the average inflation for the fiscal year from July to May has reached 29.16%, compared to 11.29% in the previous year.
