Inflation in 2021: is Pakistan really doing better than other countries? – Business

Dawn.com compared inflation in Pakistan with five other countries including India and Bangladesh to see where we were.

Sugar. Wheat. Gasoline. The prices go up one after the other. Pakistanis felt the effects strongly as the country’s inflation, measured by the Consumer Price Index (CPI), hit its highest level in 20 months in November.

The government has faced relentless criticism and the opposition has organized several rallies across the country – the Pakistan Democratic Movement (PDM) has already planned a “huge protest” for next year as well. The protests were not limited to political parties either, with lawyers from Sindh and Khyber Pakhtunkhwa also boycotted the courts to demonstrate against the price hikes.

While acknowledging the difficulties faced by the inflation-stricken public, the government has stuck to one position throughout – Pakistan has done “relatively better” than other countries.

But is it really true?

Dawn.com contacted experts to see how a benchmarking could be done to assess the government’s position.

Methodology

Business reporter Khurram Husain said Pakistan’s situation should be compared to other regional countries like those in the South Asian Association for Regional Cooperation (Saarc) – Afghanistan, India, Bangladesh, Maldives, Sri Lanka, Bhutan and Nepal – because they have similar savings.

Comparing Pakistan to countries like Turkey and Brazil doesn’t make sense because their economies are very different, he said.

Pakistan Initiative at Atlantic Council’s South Asia Center Director and host of pakistonomy Uzair Younus podcast shared a similar point of view. “Regional is always a better indicator,” he said, adding that Pakistan’s economy could also be compared to those of Nigeria and Vietnam as they have similar GDP per capita.

Younus said that the Consumer Price Index (CPI) – a measure of the change in prices paid by general consumers for a specific basket of goods and services – and the food sub-indices of these countries could be compared to get a sense of how they’re doing on that front.

To assess Pakistan’s place among other countries, Dawn.com decided to compare it with three regional peers – India, Bangladesh, Sri Lanka – and Vietnam and Nigeria.

For these countries, we looked at the overall CPI and the food CPI for each month, from November 2020 until the most recent data available.

If the basket of goods included in the CPI varies from country to country, and the weight given to goods – such as perishables, non-perishable foodstuffs, housing and transport – differs for those countries, it Nonetheless, it remains a good indicator of the situation in each country.

IPC: Pakistan at the top of its regional peers

We simply start by comparing each country’s November 2020 CPI value with that of November 2021 (for Bangladesh, data was available until October 2021) and calculate the percentage change. For example, Pakistan’s CPI in November 2020 was 141.83, while in November 2021 it was 158.18. This translates to an increase of 11.53 percent.

Among regional peers, Pakistan’s CPI increase was the strongest and second behind Nigeria among the six countries examined. The West African country saw its CPI jump 15.39%.

The other countries analyzed for this article saw the CPI increase limited to one digit: Sri Lanka at 9.92 pc, Bangladesh at 6.50 pc, India at 4.91 pc and Vietnam in increase of 2.10 pc.

However, comparing the development over just two months (last November and November) can be misleading if the CPI for any of the two months in question was abnormally low or high for some reason. Therefore, to get a big picture of the entire year and to make sure that the numbers for November 2020 and November 2021 were not outliers for any country, we looked at the CPI trend in each country. from November 2020 to November 2021.

These trendlines show that the CPI fell slightly at the end of 2020 for Pakistan, India and Bangladesh. But shortly after the start of the new year, indices started to rise again for all three. These three countries, along with Sri Lanka (all four are from the same region), have seen a larger increase (compared to the rest of the year) in their CPIs since August 2021, which appears to be in line with the world situation.

On the other hand, Nigeria has seen its CPI rise by at least four points every month while Vietnam’s rise has not been very marked throughout the year and its trendline is relatively flat.

Nonetheless, these lines indicate that the numbers for November 2020 and 2021, which we used to calculate the percentage increase in the CPI for each country over 12 months, are not outliers and therefore reiterate our previous ranking.

Food inflation – Pakistan ranks 3rd

In terms of the increase in the food sub-index, data collected from November 2020 to November 2021 showed the largest increase in Sri Lanka at 17.45 percent, followed closely by Nigeria at 17.20 percent. Pakistan came third with 10.47 pc.

Bangladesh and India saw their food CPIs increase to single digits, 6.63% and 1.87%, respectively. Vietnam was the only country out of the six where the food sub-index did not increase, instead it fell by 0.08 pc.

Much like the headline CPI, Pakistan and India experienced a reduction in their food sub-indices until January 2021, after which they started to increase. These countries, along with Bangladesh and Sri Lanka, saw their largest increases from September.

Nigeria, once again, has seen a steady rise in its food CPI. Vietnam has seen its sub-index fluctuate throughout the period under review, but it has never increased by more than 1.7 points.

Pakistan follows regional trend but numbers are higher

These data show that Pakistan’s CPI follows a similar trend to that of other countries in the region and gives credence to the government’s claim that this current wave of inflation is a global phenomenon.

But this clearly denies the claim that Pakistan has fared better than other countries in the region, especially India and Bangladesh. As calculated above, overall, prices in Pakistan experienced the largest increase among the regional countries analyzed. Only Nigeria’s CPI increase is higher than Pakistan’s in this dataset.

In terms of food inflation, Pakistan’s sub-index rose 10.47%, placing it second in the region, behind only Sri Lanka (17.45%). India, despite facing a farmers’ protest that continued throughout the year, succeeded in controlling food prices with an increase in the commodity CPI. food of only 1.87 pc; Bangladesh’s food CPI rose 6.63 pc.


Data are from Pakistan Bureau of Statistics, Indian Ministry of Statistics and Program Implementation, Bangladesh Bureau of Statistics, Sri Lanka Census and Statistics Department, Central Bank of Sri Lanka, of the General Bureau of Statistics of Vietnam and of the National Bureau of Statistics of Nigeria.

Header image by Mushba Said.

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