Inflation based on the Consumer Price Index (CPI) increased to 10.87% in the annual comparison in May 2021, compared to an increase of 11.1% in April 2021 and 8.2% in May 2020, according to data released Tuesday by the Pakistan Bureau of Statistics (PBS).
Inflation remains a thorny issue for the Pakistani government Tehreek-e-Insaf (PTI), which needs to balance several economic issues, including rising prices, a current account deficit obstacle, and Pakistan’s first economic contraction in decades.
How much inflation increased:
According to the monthly review of price indices, every month, the CPI increased 0.1% in May 2021 compared to an increase of 1.0 percent in the previous month and an increase of 0.3 in May 2020. The monthly value took the average inflation of 11MFY21 to 8.83% year-on-year.
Meanwhile, CPI inflation in rural areas increased 10.9% on an annual basis in May 2021, compared with an increase of 11.3% in the previous month and 9.7% in May 2020. Inflation every month, decreased by 0.03 percent but in May 2021 an increase of 0.6 percent as compared to the previous month and an increase of 0.3 percent in May 2020.
The government, which now sees its fourth finance minister in less than 3 years, has been criticized for failing to control inflation, even with growth figures above previous estimates. The inflation reading comes days after the central bank also maintains the discount rate at 7%.
Inflation not only reduces the level of business investment, but also the efficiency with which the productive factors are used.
The Sensitive Price Index (SPI) increased 19.7 percent over the previous year in May 2021, compared to a 21.3% increase in the previous month and an 11% increase in May 2020. The Index Wholesale Price (WPI) increased 19.4 percent year-over-year in May 2021 compared to a 16.6% increase a month earlier and a 1.5% increase in May 2020.