ISLAMABAD: The annual consumer inflation hit 27.6 per cent last month, the highest in 48 years, as prices of food and transport continued to remain elevated amid economic turmoil, official data showed on Wednesday.

On a month-on-month basis, the Consumer Price Index (CPI), which measures the overall change in consumer prices based on a representative basket of goods and services over time, rose 2.9pc in January, the Pakistan Bureau of Statistics said.

Inflation in urban and rural areas increased to 24.4pc and 32.3pc year-on-year, respectively. Core inflation, which doesn’t include volatile food and energy prices, also slightly rose to 15.4pc in urban areas and 19.4pc in rural areas.

Consumer prices have risen sharply over the past several months, with annual inflation staying above 20pc since June last year.

Average rise in CPI hits 25.4pc this fiscal year compared to 10.3pc a year ago

Year-on-year inflation of 27.6pc in January was the highest since May 1975, when it stood at 27.8pc, according to the investment firm Arif Habib Limited.

The CPI figure was higher than the government’s expectation of 26pc, which itself was more than double the budgeted 11.5pc target.

Mohammed Sohail, CEO of the brokerage firm Topline Securities, said the inflation statistics were expected after the rupee’s fall over the last few days, the removal of subsidies and rising taxes.

“This takes average inflation for the seven months of the current fiscal year to 25.4pc compared to 10.3pc in the same period last year,” he said, according to Reuters.

Britain-based economist Yousuf Nazar described the high food inflation as a “killer”.

“The overall rate actually masks or understates the misery of the people, and what is really going on behind these numbers,” AFP quoted him as saying.

In January, the annual change in general inflation in most groups was in double digits, data showed.

The categories that saw the highest jump included perishable food items (61.63pc), recreation and culture (44.14pc), non-perishable food items (40.3pc), transport (39.1pc), alcoholic beverages and tobacco (36.3pc), restaurants and hotels (30.1pc), furnishing and household equipment maintenance (29.9pc), miscellaneous goods and services (28.69pc), health (18.73pc), clothing and footwear (16.76pc), education (10.58pc), housing and utilities (7.83pc), and communication (1.57pc).

In the food group, the items whose prices the most were onions, chicken, wheat rice, wheat flour, gram whole, pulse moong, pulse gram, besan, mustard oil, pulse mash, fresh fruits, cooking oil, milk fresh, vegetable ghee, tomatoes, fish, pulse masoor, meat, fresh vegetables, potatoes and sugar.

The already high inflation is expected to go up in February, mainly because of an increase of Rs35 per litre in petrol and diesel prices, which can even be raised further in the fortnightly review.

Besides, the country is negotiating with the International Monetary Fund to try to unlock bailout funds to assist its struggling economy, and the loan programme is expected to push the government to increase power tariffs, which is likely to drive inflation further.

Published in Dawn, February 2nd, 2023