Pakistan is going through the worst economic crisis. It is speculated that inflation is likely to reach 27% in January. This is in comparison to the central bank’s anticipated average of 21-23% for the current financial year
It is also anticipated that the government will further increase the prices of power and gas after which the inflation will reach 30% in the upcoming months.
According to Fahad Rauf, Head of Research Ismail Iqbal Securities, “Wheat and wheat-flour prices shot up as flour mills were unable to procure wheat from provincial governments.”
He added, “We estimate the CPI (consumer price inflation) index to increase by 2.4% month-on-month led by higher food and quarterly house rent revision. On a year-on-year basis, inflation is estimated at 27% (in January 2023).”
Rauf further said, “The current real (interest) rate on core inflation is marginally positive.”
The State Bank of Pakistan has also increased its key policy rate. An official statement by SBP said, “National CPI inflation remained at elevated levels…An increase in food inflation remains the major contributor to this persistence in inflation. The uncertainty on their (fuel price) future path and expected near-term adjustments remain the major upside risks to the inflation outlook.”
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