The cost of wheat flour has reached an all-time high, which has increased weekly inflation in Pakistan by 46% i.e. by 1.80% week over week and 46.65% year over year.
The spike in the sensitive price indicator has been linked by the Pakistan Bureau of Statistics to price increases in a number of commodities, including wheat flour, tomatoes, potatoes, and bananas, among others. However, the PBS has observed a decline in the cost of items like chicken, chili powder, and LPG, among others.
Wheat flour prices have increased as a result of the government switching its subsidy program from a general to a targeted one through the Benazir Income Support Program. The cost of a 20kg bag of wheat flour has increased by 42% as a result of this modification, reaching an all-time high of Rs2,586. Food costs are predicted to continue growing as Ramadan approaches, with the CPI for March 2023 forecast to rise to 35.5% YoY.
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Sticky inflation data and the IMF program’s impasse have compelled the State Bank of Pakistan to increase its benchmark interest rate by 300 basis points, reaching a 26-year high. During its upcoming monetary policy committee meeting on April 4, the central bank is anticipated to increase the policy rate by an additional 100bps to 21%. There will likely be a significant increase in poverty as a result of this rate increase.
