ISLAMABAD: The inflation rate in Pakistan spiked to 21.3% in June — the highest pace since 2008 — because of exponential growth in the prices of petroleum products, the Pakistan Bureau of Statistics (PBS) reported.
On a month-on-month basis, inflation soared to a 30-year high as it clocked in at 6.3% in the last month of the fiscal year 2021-22, compared to an increase of 0.4% in the previous month and a decrease of 0.3% in May 2021.
According to the PBS, the CPI-based inflation rate jumped 19.8% in urban areas and 23.6% in villages and towns.
An analyst from Arif Habib Ltd, Sana Tawfiq, said that the inflation rate was “way above the market expectation.”
“An increase came on the back of three sectors — food, transport, and housing and electricity,” she said, identifying four major reasons behind the whopping increase:
The analyst was of the view that the impact of a significant increase in the price of petroleum products as the coalition government rolled back the subsidies provided by the Imran Khan-led government was significantly reflected in June’s inflation rate.
Tawfiq elaborated that an increase in electricity tariff played a major role in the rise of the housing index.
The inflation rate remained double-digit — which has eroded people’s purchasing power — due to an increase in the prices of food items and petroleum products, which are now taxed by the government. The pace of food inflation surged by 24% in cities and 27% in villages and towns last month.
The prices of both non-perishable and perishable food products increased significantly last month. The food group saw over a 24% increase in prices in June compared to the same month a year ago. Prices of perishable food items increased by 36.34%, according to the PBS.
Non-food inflation increased by 17.3% in urban areas and 20.4% in rural areas, according to the national data collecting agency.
Core inflation — calculated after excluding food and energy goods — jumped by 11.5% in urban areas and 13.6% in rural areas. Tawfiq maintained that a continuous increase in core inflation was “alarming”.