Rising inflation

Skyrocketing inflation continues to hit citizens across the country, with the latest year-on-year inflation figures again exceeding 25%. The little hope of a decrease in the inflation rate seen after September’s figures were released disappeared in just a month. Indeed, attempts to find any silver lining grow even more desperate — the latest being at least it’s better than the all-time record numbers we saw in August. The record 27.26% figure in August — the highest monthly increase since the 1971 war — was followed by 23.18% inflation in September, rising back to 26.56% last month. Even month-on-month inflation was up by almost 5%, showing that it is not just the harsh global economic climate that is to blame.

Prices of perishable food items were most responsible for the increase, rising an astonishing 70% since October 2021, while transport also rose by over 53%, and non-perishable food items came in at over 30%. Inflation also hit rural consumers much harder, almost touching 30%. Official data shows that inflation in October rose 4.71% month-on-month. Pakistan continues to be in the grips of high food and transport prices, which pushed headline inflation in August to a 49-year-high of 27.26%.

Inflation in October was driven by a double-digit increase in all sub-indices except communications. Continuing high inflation also throws cold water on the finance ministry’s most recent report, which claimed that “inflationary risks have partially been alleviated due to timely decisions”, and that “declining international commodity prices are expected to offset the inflation spikes that emerged due to domestic supply shocks”. The reality is that inflation was about 4% higher than the ministry predicted, or a margin of error of almost 20%.

While the blame cannot entirely be placed on the government — the war in Ukraine, the recent floods and political instability remain the biggest factors — the large gaps between projections and reality are only raising questions over the government’s top economic planners’ foresight and increasing public ire when the numbers prove to be so far off.

Published in The Express Tribune, November 8^th, 2022.

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