Pakistan's February CPI rises 31.5% year-on-year

Pakistan's consumer price index (CPI) rose 31.5% in the month of February year-on-year, the statistics bureau said on Wednesday. Core inflation increased 17.1% and 21.5% year-on-year for urban centres and rural centres, respectively. "This is something the central bank will need to keep an eye on when deciding the quantum of increase for the policy rate," Pasha said.

Pakistan's consumer price index (CPI) rose 31.5% in the month of February year-on-year, the statistics bureau said on Wednesday. Prices were up 4.3% in February from the previous month, the bureau said in a release. In January, the CPI was up 27.55% year-on-year.

The government is undertaking belt tightening, aims to increase revenues though taxes, and has also allowed the rupee to depreciate as it thrashes out a deal with the International Monetary Fund (IMF) to secure more than $1 billion in funding. Devastating floods last year compounded economic difficulties.

"Inflation is expected to continue rising in the months ahead as IMF-mandated structural adjustments and currency devaluation filter through the supply chain," said Mustafa Pasha, chief investment officer at Lakson Investments. Core inflation increased 17.1% and 21.5% year-on-year for urban centres and rural centres, respectively.

"This is something the central bank will need to keep an eye on when deciding the quantum of increase for the policy rate," Pasha said. Investors expect the State Bank of Pakistan to raise its key policy rate by 200 basis points in an off-cycle meeting on Thursday.