Arooj Zulfiqar

Pakistan's annual inflation rate climbed to 31.4% in September 2023, up from 27.4% in August driven by high fuel and energy prices, according to data from Pakistan Bureau of Statistics. On a month-on-month basis, inflation climbed 2% in September, compared to an increase of 1.7% in August. Food inflation remained elevated at 33.1% with the year-on-year increase in non-perishable food items at 38.4% and 4.37% for perishable items. In September 2023, the inflation measured by Consumer Price Index (CPI) increased to 29.7% year-on-year in urban areas, compared to 25% in the previous month, and 21.2% in September 2022. On a month-on-month basis, the CPI inflation went up by 1.7% in September 2023 compared to 1.6% in the previous month, and 2.1% in September 2022. CPI inflation in rural areas increased to 33.9% on a year-on-year basis in September 2023 compared to an increase of 30.9% in the previous month and 26.1% in September 2022.

On a month-on-month basis, it increased by 2.5% in September 2023 as compared to 1.9% the previous month, and 0.2% in September 2022. “The rising inflation in Pakistan is a matter of grave concern, deeply impacting the daily lives of people. Several factors converge to contribute to the rising inflation,” said Ali Kemal, the Chief Economist at the Sustainable Development Goals Support Unit, the Ministry of Planning Development and Special Initiatives. “The impact of such high inflation is far-reaching and multifaceted. It erodes the purchasing power of consumers, effectively reducing their standard of living. With food prices rising rapidly, low-income households are hit the hardest as their daily essentials become less affordable,” he underscored. He said, “The international market has witnessed surges in commodity prices, including oil, food and other essential raw materials. Pakistan, as a net importer of many of these goods, has borne the brunt of these cost escalations.”

Ali Kemal said, “Businesses are also struggling to maintain their operations due to rising input costs, which result in reduced production and layoffs. Pakistan's industrial and agricultural sectors, key drivers of economic growth, are facing significant headwinds.” “Additionally, the country's high poverty rate may worsen, leading to increased social and political instability,” he cautioned. Kemal said: “Supporting and investing in the agricultural sector, which provides livelihoods for a significant portion of the population, is crucial to stabilise food prices.” Furthermore, he said exploring opportunities for cooperation with international partners to secure essential imports at stable prices is also essential. Besides, he called for the government to carry out the much-awaited reforms in the energy sector to bring down the rates of electricity for consumers, whose purchasing power is being squeezed by an enormous increase in power tariff.

Credit: INP-WealthPk