Pakistan's CPI Sees 20% Increase from Previous Year

Pakistan's consumer price index (CPI) for March revealed a notable decrease, marking the lowest reading in nearly two years, according to data from the Pakistan Bureau of Statistics. The CPI was up by 20.7% compared to the same month last year, a significant decline from previous levels of inflation above 20%. Additionally, March's inflation saw a 1.7% increase compared to the previous month.

The struggling South Asian economy, valued at $350 billion, has been grappling with high inflation rates since May 2022, reaching a peak of 38% in May 2023. These challenges are compounded by the necessity to implement contentious reforms as part of an International Monetary Fund (IMF) bailout program.

Despite the improved inflation figures, Pakistan has experienced economic contraction, with GDP shrinking by 0.17% in the financial year 2023. Economic activity slowed notably due to historically high-interest rates, which currently stand at 22%.

In February, annual CPI inflation was recorded at 23.1%, with no change month-on-month. Both the IMF and the central bank had anticipated a slowdown in inflation during the last quarter of the financial year, but the drop observed in March was sharper than expected.

The finance ministry had projected inflation to range between 22.5% and 23.5% in March, citing factors such as the high base effect and favorable domestic and global conditions. Despite the challenges, the government announced a fuel price hike on Sunday, raising prices by 3.5% to 289.41 Pakistani rupees ($1.04) per liter (0.26 gallons). Nevertheless, the finance ministry expressed optimism about growth prospects in the current year.