Inflation skyrockets to 12.3% in December


December 2021 once again saw a double-digit increase in the prices of consumer items as inflation edged up to 12.3% from 11.5% in November 2021, data released by the Pakistan Bureau of Statistics (PBS) showed on Saturday.

Analysts had already anticipated the inflation to be double-digit, as the current CPI inflation was in line with their expected targets.

On a month-on-month basis, inflation remained “flattish”, slightly declining by 0.02% owing to a significant decline in food inflation.

According to Arif Habib Limited (AHL), the infla tion for the month of December is the highest in 22 months (February 2020: 12.40%).

An analyst from AHL Sana Tawfiq said that the inflation rate is in line with the market expectation.

Tawfiq said: “The year-on-year increase was fueled by non-food items household equipment. Moreover, the base inflation last year was lower.”

“A slight decrease of 0.02% on a month-on-month basis came on the back of an improvement in food inflation,” she said.

Tawfiq elaborated that a decrease in food group month-on-month was as expected “and was re-flected in the weekly sensitive price index (SPI).”

The national data-collecting agency has reported the latest inflation figures before the Monetary Policy Committee meeting this month. The meeting is expected to maintain a status quo at 9.75%.

The Wholesale Price Index (WPI), which captures prices in the wholesale market, also rose sharply by 26.2% in December compared to 9.5% in the same month a year ago.

The PBS reported that the overall inflation rate re-corded an increase in both the urban and rural areas. The inflation rate in urban areas edged to 12.7% in December and rural areas surged to 11.6% over the same month of the last year. In December last year, the inflation rate in urban areas was 7% meanwhile, in rural areas it stood at 9.5%.

The food inflation rate in villages and cities dropped to 9% and 11.7% on a yearly basis. In December 2020, food inflation for villages and cities clocked in at 13.4% and 12.6% respectively.The non-food inflation rate was recorded at 13.4% in urban areas and 14% in rural areas compared to 3.8% and 6.1% in the same month of last year.

Core inflation — calculated by excluding food and energy items — rose by 8.3% in urban areas and by 8.9% in a rural area during the month under review, reported the national data collecting agency The food group saw a price increase of 10.33% in December from the same month a year ago. Within the food group, prices of non-perishable food items surged by 14.18% on an annualised basis mean-while the prices of the perishable goods were effec-tively reduced by 10.23% year-on-year.


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