According to data released on Friday, consumer price index (CPI)-based inflation reached 21.3 percent on an annual basis in June 2022, up from an increase of 13.8 percent the previous month and 9.7 percent in June 2021, as rising commodity costs and a weaker rupee hurt the local economy.
According to Fahad Rauf, head of research at Ismail Iqbal Securities, “This is the highest monthly CPI reading since December 2008, when it was recorded at 23.3 percent.”
The Pakistan Bureau of Statistics reported that, on a month-to-month basis, CPI-based inflation rose by 6.3 percent in June 2022 as opposed to a rise of 0.4 percent the previous month and a fall of 0.3 percent in June 2021. (PBS).
In an effort to combat economic headwinds, the State Bank of Pakistan (SBP) increased the key interest rate by 150 basis points to 13.75 percent earlier in May. At the time, the central bank predicted that if power and fuel subsidies are eliminated, inflation is anticipated to spike briefly, remain high through FY23, and then drop precipitously in FY24.
On the other hand, the current administration increased the price of petroleum goods in an effort to resurrect the International Monetary Fund (IMF) programme, which is anticipated to drive up inflation even more.
The government announced an increase in the price of petroleum products late on Thursday, with the new ex-depot price of gasoline rising to Rs248.74 a litre (following an increase of Rs14.85) and the price of diesel to Rs276.54 (after a hike of Rs13.23).
The resumption of the IMF programme, according to Finance Minister Miftah Ismail, requires an increase in the petroleum development fee of Rs. 10 on gasoline and Rs. 4 on diesel.