Islamabad, September 1, 2023 – The Pakistan Bureau of Statistics (PBS) has reported a staggering 27.4 percent year-on-year increase in headline inflation, as measured by the Consumer Price Index (CPI), for the month of August 2023. This surge in inflation has raised concerns about the economic stability of the country.
According to the PBS report, CPI inflation General, which tracks overall consumer price increases, saw a sharp rise to 27.4% in August 2023. While this marks a slight deceleration from the previous month’s 28.3%, it is significantly higher than the 27.3% recorded in August 2022. On a month-on-month basis, there was an increase of 1.7% in August 2023, a notable reduction from the 3.5% spike seen in the previous month and the 2.4% increase in August 2022.
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Breaking down the data further, CPI inflation Urban increased to 25.0% on a year-on-year basis in August 2023, compared to 26.3% in the previous month and 26.2% in August 2022. On a month-on-month basis, it rose by 1.6% in August 2023, down from 3.6% in the previous month and 2.6% in August 2022.
In rural areas, CPI inflation Rural surged to a startling 30.9% on a year-on-year basis in August 2023, slightly lower than the 31.3% recorded in the previous month but substantially higher than the 28.8% in August 2022. On a month-on-month basis, rural inflation increased by 1.9% in August 2023, compared to a 3.3% increase in the previous month and a 2.2% increase in August 2022.
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The Sensitive Price Indicator (SPI), which tracks price changes in essential commodities, also displayed concerning trends. SPI inflation on a year-on-year basis increased to 27.9% in August 2023, down from 29.3% in the previous month but significantly higher than the 34.0% recorded in August 2022. On a month-on-month basis, SPI inflation surged by 4.1% in August 2023, compared to 2.8% in the previous month and 5.2% in August 2022.
The Wholesale Price Index (WPI), which measures the changes in wholesale prices of goods, saw a year-on-year increase of 24.3% in August 2023. This was up from 23.1% in the previous month but substantially lower than the 41.2% recorded in August 2022. On a month-on-month basis, WPI inflation increased by 4.2% in August 2023, compared to 2.5% in the previous month and 3.1% in August 2022.
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Core inflation, which excludes food and energy prices and is often considered a more reliable indicator of long-term price trends, also displayed alarming figures. In urban areas, core inflation measured by non-food non-energy items increased to 18.4% on a year-on-year basis in August 2023, remaining stagnant compared to the previous month but significantly higher than the 13.8% in August 2022. On a month-on-month basis, it increased by 1.8% in August 2023, up from 1.2% in the previous month and equal to the increase in August 2022.
In rural areas, core inflation measured by non-food non-energy items increased to 25.9% on a year-on-year basis in August 2023, up from 24.6% in the previous month and significantly higher than the 16.5% in August 2022. On a month-on-month basis, it increased by 2.8% in August 2023, compared to 1.2% in the previous month and 1.8% in August 2022.
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Furthermore, core inflation measured by a 20% weighted trimmed mean showed that in urban areas, it increased to 23.0% on a year-on-year basis in August 2023, up from 21.7% in the previous month and 21.4% in August 2022. On a month-on-month basis, it increased by 1.5% in August 2023, down from 1.9% in the previous month and equal to the increase in August 2022.
In rural areas, core inflation measured by the same 20% weighted trimmed mean increased to 30.5% on a year-on-year basis in August 2023, up from 28.7% in the previous month and significantly higher than the 23.8% in August 2022. On a month-on-month basis, it increased by 1.4% in August 2023, compared to 2.4% in the previous month and 1.8% in August 2022.
These alarming inflation figures pose significant challenges for Pakistan’s economy, with rising prices impacting the cost of living for ordinary citizens and putting pressure on policymakers to take corrective measures. The government and central bank will likely face mounting pressure to implement policies aimed at stabilizing the economy and curbing inflationary pressures.
