According to the Pakistan Bureau of Statistics (PBS), the prices of food, beverages, and transportation in the country increased by more than 45 percent.
The country's consumer price index (CPI) rose 31.5 percent year-on-year in February, the highest annual rate in nearly 50 years, the Pakistan Bureau of Statistics said on Wednesday.
According to the Pakistan Bureau of Statistics (PBS), the prices of food, beverages, and transportation in the country increased by more than 45 percent. February's 31.5 percent rate is the highest since 1974 a spokesman for Pakistan's statistics agency told Reuters.
Previously, the annual average inflation during the financial year 1973-1974 was 32.78 percent he added. The Bureau of Statistics said in a statement that prices last month were 4.3 percent higher than the previous month. CPI rose by 27.55% year-on-year in January.
Prices of food and non-alcoholic beverages increased by 45.07 percent compared to last year, while tobacco prices increased by 47.59 percent due to an increase in tax on cigarettes. The government also passed a supplementary finance bill in February that levied additional taxes of Rs 170 billion during the fiscal year starting last July.
While the General Sales Tax (GST) on services has been increased from 17 to 18 percent. The goal of the move was to increase revenue.
The government is engaged in drastic measures aimed at increasing revenue through taxes. Apart from this, the government is also trying to reach an agreement with the International Monetary Fund (IMF) for a fund of one billion dollars.
On Wednesday, the rupee depreciated by 1.73 percent against the dollar and settled at Rs 266.11. Since the beginning of this year, the rupee has depreciated by about 15 percent, fueling inflation.
Fahad Rauf, head of research at local brokerage firm Ismail Iqbal Securities, says, It is still not the end. Higher inflation is expected in March. Food prices are expected to rise further as Ramadan approaches
(Pakistan Bureau of Statistics)
Inflation is expected to continue to rise in the coming months as IMF-led structural reforms and currency devaluations feed through the supply chain said Mustafa Pasha, chief investment officer at Lexon Investments. '
Core inflation increased by 17.1 and 21.5 percent year-on-year for urban and rural areas, respectively. Mustafa Pasha said Core inflation is something that the central bank will need to keep an eye on when deciding the rate of a policy rate hike.
In an off-cycle meeting on Thursday, investors anticipate the State Bank of Pakistan to raise its key policy rate by 200 basis points. Fahad Rauf says that due to the increase in the core inflation rate, the possibility of further inflation increases
