July inflation reaches 24.9 percent, the highest level in 14 years

The Consumer Price Index (CPI) for July recorded inflation of 24.93 percent, the biggest year-over-year increase since November 2008.

According to information released by the Pakistan Bureau of Statistics (PBS) on Monday, CPI inflation rose 4.35 percent from June.

Last month, the year-over-year inflation rate was estimated at 21,3 percent, the highest level in over 13 years.

According to PBS data, inflation was recorded at 23.6 percent in urban regions and 26.93 percent in rural areas.

The transport sector led the inflationary trend with a price increase of 64.73 percent year-over-year, followed by perishable food goods at 32.93 percent and nonperishable food items at 28.12 percent.

All other industries had double-digit inflation except for the education and communication sectors, where inflation was 9.79% and 4.09%, respectively.

These industries are:

  • Restaurants and hotels: 24.97pc
  • Alcoholic beverages and cigarettes: 22.48 percent
  • Housing and expenses: 21.78 percent
  • Maintenance of furnishings and domestic equipment: 19.69%
  • Other products and services: 17.14 percent
  • Recreation and culture: 15.41pc
  • Clothing and shoes: 14.57 percent
  • Health: 11.22 percent

According to a PBS press release, the prices of motor fuels increased by as much as 99 percent annually, followed by electricity at 86 percent and liquefied hydrocarbons at 51 percent.

Pulses, onions, ghee, and cooking oil were among the food items with the most significant price increases compared to the prior year.

In its Monthly Economic Update and Outlook for July, the Ministry of Finance stated earlier this week that year-on-year inflation, which has remained in double digits since November 2021, would continue in July and hover around the level observed in June (21.3pc) due to the increase in international commodity prices, particularly energy prices, and the depreciation of the rupee.

According to the forecast, domestic inflation was impacted by international commodity prices, particularly oil and food costs, and the exchange rate depreciation. However, it acknowledged that the majority of inflation in the last two months was also due to supply shocks, whose impact has eclipsed government efforts to stabilize prices.

It cautioned that persistent political turmoil was producing governance issues and exacerbating market insecurity already brought on by low foreign exchange reserves and external pressures.

“Inflationary and external sector threats are aggravating the economy’s macroeconomic imbalances. In addition, the current political upheaval heightens economic uncertainty, weakening the rupee and influencing the cost of production. These variables render the economic outlook unpredictable.”