The solution was in using the substr function together with the cmp operator to get the intended output.

foreach my $p ( sort {   substr($$a{GRADE},0,1) cmp substr($$b{GRADE},
+0,1)
                       || substr($$b{GRADE},0,2) cmp substr($$a{GRADE}
+,0,2)} @{$AG{$A}}) {


output

D2
D1
P5
P5
P4
P3
P3
P2
P1
etc.....
..........


}
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