Islamabad, August 1, 2023 – The headline inflation in Pakistan witnessed a significant increase, reaching 28.3 percent in July 2023, based on the Consumer Price Index (CPI) year-on-year comparison.
This surge in inflation comes after a previous increase of 29.4 percent in the preceding month and 24.9 percent in July 2022.
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On a month-on-month basis, the inflation rate rose by 3.5 percent in July 2023, following a decrease of 0.3 percent in the previous month and an increase of 4.3 percent in July 2022.
Analyzing the inflation trends in urban areas, the CPI inflation increased by 26.3 percent year-on-year in July 2023, compared to a 27.3 percent increase in the previous month and 23.6 percent in July 2022. On a month-on-month basis, urban inflation surged by 3.6 percent in July 2023, contrasting with a 0.1 percent increase in the previous month and a 4.5 percent increase in July 2022.
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Similarly, the CPI inflation for rural areas in Pakistan rose to 31.3 percent on a year-on-year basis in July 2023. This increase was slightly lower than the previous month’s rise of 32.4 percent but higher than the 26.9 percent recorded in July 2022. On a month-on-month basis, rural inflation experienced a 3.3 percent increase in July 2023, in contrast to a decrease of 0.8 percent in the previous month and an increase of 4.2 percent in July 2022.
The Sensitive Price Indicator (SPI) inflation, another measure of inflation in Pakistan, grew by 29.3 percent on a year-on-year basis in July 2023. This was lower than the 34.9 percent increase reported in the previous month but higher than the 28.2 percent recorded in July 2022. On a month-on-month basis, SPI inflation rose by 2.8 percent in July 2023, following a 0.2 percent increase in the previous month and a significant 7.3 percent increase in July 2022.
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The Wholesale Price Index (WPI) inflation, which tracks the changes in wholesale prices of goods in Pakistan, also showed an increase. The year-on-year WPI inflation reached 23.1 percent in July 2023, compared to 22.4 percent in the previous month and 38.5 percent in July 2022. On a month-on-month basis, WPI inflation rose by 2.5 percent in July 2023, after a decrease of 0.3 percent in the previous month and an increase of 2.0 percent in July 2022.
To gauge the core inflation, excluding volatile components like food and energy, Pakistan uses two measures – Core inflation (NFNE) and Core inflation (Trimmed). The NFNE inflation for Urban areas increased by 18.4 percent on a year-on-year basis in July 2023, slightly lower than the 18.5 percent increase in the previous month but significantly higher than the 12.0 percent recorded in July 2022. On a month-on-month basis, NFNE inflation rose by 1.2 percent in July 2023, following a 0.7 percent increase in the previous month and an equal increase in July 2022.
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For Rural areas, the NFNE inflation rose to 24.6 percent on a year-on-year basis in July 2023, down from the previous month’s 25.2 percent but substantially higher than the 14.6 percent in July 2022. On a month-on-month basis, NFNE inflation increased by 1.2 percent in July 2023, compared to a 0.9 percent increase in the previous month and a 1.6 percent increase in July 2022.
The Core inflation (Trimmed) measured by a 20 percent weighted trimmed mean for Urban areas increased to 21.7 percent on a year-on-year basis in July 2023, down from 22.9 percent in the previous month but higher than the 19.0 percent in July 2022. On a month-on-month basis, it rose by 1.9 percent in July 2023, following a 0.8 percent increase in the previous month and a 2.7 percent increase in July 2022.
In Rural areas, the Core inflation (Trimmed) measured by a 20 percent weighted trimmed mean increased to 28.7 percent on a year-on-year basis in July 2023, down from the previous month’s 29.9 percent but higher than the 21.7 percent in July 2022. On a month-on-month basis, it rose by 2.4 percent in July 2023, after a 0.1 percent increase in the previous month and a 2.7 percent increase in July 2022.
The soaring inflation rates in Pakistan could pose challenges to the country’s economy and lead to increased financial strain on households and businesses. Authorities may need to implement measures to control inflation and stabilize the economy to ensure sustained growth and affordability for the citizens.
