Islamabad, June 8, 2023: The Pakistan Economic Survey 2022-23, released on Thursday, identifies weaker exchange rates and supply disruption caused by floods as key factors contributing to high inflation in the country.
According to the survey, the Consumer Price Index (CPI) inflation for the period July-April FY2023 stood at 28.2 percent, compared to 11.0 percent during the same period the previous year. Other inflation indicators, such as the Sensitive Price Indicator (SPI), recorded a rate of 31.7 percent, up from 16.9 percent last year.
The Wholesale Price Index (WPI) also saw an increase, reaching 34.0 percent in July-April FY2023 compared to 22.9 percent in the same period last year.
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The survey points out that inflationary pressures are stemming from several factors, including the depreciation of the exchange rate, supply disruptions caused by flood damages, higher global food prices, and broader tariff reforms related to electricity and fuels.
To address rising prices, the government has implemented administrative actions, policy reforms, and relief measures aimed at controlling the prices of essential items.
Efforts are being made to maintain strategic reserves of wheat, sugar, and pulses, and District Price Control Committees are monitoring the prices of essential items to ensure their availability at reasonable rates.
While global inflationary pressures have intensified in recent years, the survey suggests that the international commodity price outlook is favorable, which may help offset the negative impact of currency depreciation.
Additionally, timely measures such as the Kissan Package, expected political stability, and a stable exchange rate are anticipated to contribute to price stability, along with an improved crop outlook due to these measures.
Looking ahead, the survey predicts that inflation rates will normalize in the medium term, particularly in FY2024 and FY2025, due to the high base effect and improvements in the agriculture sector, as well as expected favorable global and domestic environments.
