Pakistan’s annual inflation rate rose to 31.4 per cent in September from 27.4pc in August, statistics bureau data showed on Monday, as the country reels from high fuel and energy prices.

The country is embarking on a tricky path to economic recovery under a caretaker government after a $3 billion loan programme approved by the International Monetary Fund (IMF) in July averted a sovereign debt default, but with conditions that complicated efforts to rein in inflation.

On a month-on-month basis, inflation climbed 2pc in September, compared to an increase of 1.7pc in August. Reforms required by the IMF bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fuelled annual inflation, which rose to a record 38pc in May.

Food inflation remained elevated at 33.1pc with the year-on-year increase in non-perishable food items at 38.4pc and 4.37pc for perishable food items.

Annual consumer inflation in urban and rural areas increased to 29.7pc and 33.9pc year-on-year, respectively.

Meanwhile, the highest year-on-year increase was recorded in the categories of alcoholic beverages and tobacco (87.45pc), recreation and culture (58.77pc), furnishing and household equipment maintenance (39.32pc) and non-perishable food items.

Index-wise increase in inflation YoY (in descending order)

• Alcoholic beverages and tobacco: 87.45pc
• Recreation and culture: 58.77pc
• Furnishing and household equipment maintenance: 39.32pc
• Non-perishable food items: 38.41pc
• Miscellaneous goods and services: 36.42pc
• Restaurants and hotels: 34.3pc
• Transport: 31.26pc
• Housing and utilities: 29.7pc
• Health: 25.28pc
• Clothing and footwear: 20.55pc
• Education: 11.12pc
• Communication: 7.42pc
• Perishable food items: 4.37pc

Interest rates have also risen to their highest at 22pc, and the rupee hit all-time lows in August before recovering in September to become the best performing currency following a clampdown by authorities on unregulated FX trade.

On Friday, the ministry of finance said in its monthly report that it anticipated inflation remaining high in the coming month, hovering around 29-31pc due to an upward adjustment in energy tariffs and a major increase in fuel prices.

The report added that inflation was, however, expected to ease, especially from the second half of the current fiscal year that starts on Jan 1.

On Saturday, the government cut petrol and diesel prices from a record high, after two consecutive hikes. The finance ministry cited international prices of petroleum products and the improvement in the exchange rate, following the clampdown on unregulated FX trade.

Inflation has been elevated, hovering in double digits, since November 2021.
The country targeted inflation at 21pc for the current fiscal year, but it averaged 29pc during the first quarter.

Worsening economic conditions, along with rising political tensions in the run-up to a national election scheduled for November, triggered sporadic protests in September, with many Pakistanis saying they are struggling to make ends meet.

Analysts said the inflation reading was in line with market expectations.

Tahir Abbas, head of research at Arif Habib Limited, a Karachi-based investment company, said inflation appeared to have peaked for the current fiscal year and would subsequently recede.

“The higher reading is mainly due to the low base effect which was also mentioned in the last monetary policy statement. Going forward, in the next few months, we expect inflation to ease to around 26-27pc,” said Fahad Rauf, head of research at Ismail Iqbal Securities, a Karachi-based brokerage firm.

Rauf said higher inflation statistics should not impact monetary policy.

RAWALPINDI: In light of recommendations by the Special Branch and relevant departments following a survey of Adiala Jail where former prime minister Imran Khan is incarcerated, the police have ramped up security in the vicinity of the jail by deploying elite commandos and setting up additional security pickets to ensure foolproof measures.

After the survey, the officials concerned recommended an increase in security and search operations targeting shops located in front of the jail and residential areas in the surroundings of the central prison.

Sources said police pickets were established on Adiala Road and on both sides of the jail premises to ensure foolproof security, whereas two contingents of Elite Force would also patrol the area around the jail in two shifts. The officials also recommended keeping a record of CNICs and other details of the visitors.

The SSP operations and the chief traffic officer accompanied by other senior police officials visited the jail and held a meeting with the superintendent to take stock of security measures.

During the meeting, it was decided that the jail administration would ensure the security of the premises, while the police would be responsible for the security outside the jail.

PTI Chairman Imran Khan was shifted to Central Jail Adiala from District Jail Attock following the orders of the Islamabad High Court on September 26 amid tight security.

The high court had made this decision while hearing a plea moved by the PTI chief seeking transfer from Attock Jail to Adiala.

The former prime minister was shifted to Attock jail on August 5, 2023, after a court sentenced him to three years in prison in the Toshakhana case for concealing details of gifts he received as the prime minister of Pakistan.

After his sentence in the Toshakhana case was suspended by the high court, the government detained the ex-premier in the cipher case.

The cipher case pertains to a diplomatic document which reportedly went missing from Imran’s possession. The PTI alleged that it contained a threat from the United States to oust Imran Khan from power.

In the same case, a special court had sent the PTI chairman on judicial remand till Oct 10. It may be noted that an IHC bench is also hearing a plea moved by the PTI chairman seeking post-arrest bail in the cipher case.

Last month, the court had rejected a request by the Federal Investigation Agency seeking in-camera proceedings of the bail plea filed by Mr Khan. Proceedings against former foreign minister Shah Mahmood Qureshi in the same case are also underway.

Published in Dawn, October 2nd, 2023

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index gained over 394 points during trade on Monday, which analysts attributed to what seemed like an improved outlook in the economy.

The optimism in the market came as the government announced a reduction in fuel prices, slashing the prices of petrol and high-speed diesel by Rs8 per litre and Rs11 per litre, respectively, for the next fortnight.

It also follows a weeks-long rally of the Pakistani rupee. It appreciated by Rs0.98 to reach 286.76 against the dollar by day’s end, according to the State Bank of Pakistan.

The index reached 46,627.08, up 0.85pc, when the trading closed. It had reached a high of 46,704.63 points at 11:15am, 472.04 points from the previous close of 46,232.59 points.

Major activity was reported in stocks such as WorldCall Telecom Limited, Cnergyico PK Limited, Oil and Gas Development Company Limited, Pakistan Petroleum Limited, First Prudential Modaraba and BankIslami Pakistan Limited.

The top advancers included First Punjab Modaraba, Pak-Gulf Leasing Company Limited, Hala Enterprises Limited, and First Prudential Modaraba.

The top losers included PICIC Insurance Limited, SME Leasing Limited, Ashfaq Textile Mills Limited and Habib Insurance Company Limited.

Analysts weigh in

Ahsan Mehanti, chief executive of Arif Habib Commodities, noted the main bull market drivers to be the IMF review meetings this month for the next tranche release and an “upbeat growth outlook”.

He added: “Upbeat data on crop output, cotton production, power generation, fertiliser, autos, POL and cement sales in September ’23, the rupee recovery and government deliberations on privatisation of SOEs [state-owned enterprises] played a catalyst role in the bullish activity.”

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