KARACHI: The headline inflation hit 28-month high after the Consumer Price Index (CPI) increased 13.8 per cent on a year-on-year basis in May 2022, analysts said.

According to data released by the Pakistan Bureau of Statistics (PBS) on Wednesday, the headline inflation during the month increased by 13.8 per cent, compared with 13.4 per cent during the previous month and 10.9 per cent in the same month of 2021.

With the latest figures, the average inflation for the first 11 months of fiscal year 2022 arrived at 11.29 per cent, compared with 8.83 per cent during the same period last fiscal year.

The latest increase in the CPI inflation was led by food up 17.3 per cent on a year-on-year basis, transport up 31.8 per cent, restaurants up 15.98 per cent, household equipment up 16.1 per cent, miscellaneous up 13.3 per cent, health up 10.6 per cent, clothing and footwear showing an increase of 11.3 per cent, recreation and culture showing a growth of 12.3 per cent and housing increased 5.8 per cent on a year-on-year basis.

“On a monthly basis, the inflation remained under pressure mainly on the back of a surge in the prices of non-perishable food items, as the food index was up 0.86 per cent,” Sana Tawfik at Arif Habib Limited said.

“The increase in average prices of wheat flour, eggs, onions and pulses mainly contributed to the higher food index while decline in the essential food items like tomatoes and fresh vegetables kept the food index contained,” she added.

Moreover, the transport index recorded a jump of 2.74 per cent on a month-on-month basis on the back of higher petroleum product prices due to petroleum subsidy reversal for the last five days of May reflecting in the numbers.

On the contrary, the housing index declined 2.33 per cent on a month-on-month basis due to lower fuel charge adjustments of February 2022 of Rs4.99/kWh keeping electricity charges down on a month-on-month basis.

The urban core inflation measured by non-food and non-energy increased 9.7 per cent on a year-on-year basis, compared to an increase of 9.1 per cent in the previous month and 6.8 per cent in the same month of last year.

The headline rural inflation, on the other hand, increased 11.5 per cent on a year-on-year basis in May 2022, compared to an increase of 10.9 per cent in the previous month and 7.6 per cent in May 2021.

On a monthly basis, urban and rural core inflation both were up 0.7 per cent and 0.9 per cent on a month-on-month basis, respectively.

“The CPI is likely to continue hovering in the double digits in the near term at least, with further pressure expected with the rollback of the subsidy package,” Sana said.

“Moreover, in the latest monetary policy meeting, the State Bank of Pakistan (SBP) increased the policy rate by 150 basis points to 13.75 per cent. The Monetary Policy Committee (MPC) highlighted that since the last MPC meeting held in April 2022, growth projection appeared stronger than earlier estimates,” she added.