Inflation dips from 5.8% to 5.1% in September

Inflation dips from 5.8% to 5.1% in September


Inflation measured by Consumer Price Index (CPI) was recorded at 5.8% during first two months (July and August) of the ongoing fiscal year. However, the inflation slightly declined to 5.12% in third month (September) of the current fiscal year due to reduction in petroleum products prices, according to latest data of Pakistan Bureau of Statistics (PBS).

The PTI led government had reduced the petroleum products prices by up to Rs6.37 per liter for September.

The State Bank of Pakistan (SBP) said inflation is inching up, particularly from March 2018 onwards. The jump is even more pronounced in core inflation- a key measure reflecting the underlying inflationary pressures in the economy.

For FY19, SBP’s inflation projections show that the average headline inflation is expected to fall in the revised forecast range of 6.5-7.5%.

According to the PBS, on month-on-month basis, inflation decreased by 0.1% in September 2018 as compared to an increase of 0.2% in the previous month.

Meanwhile, core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8% on annual basis in September 2018 as compared to an increase of 7.7% in the previous month and 5.4 percent in September 2017.

The break-up of inflation of 5.12% in September 2018 showed that food and non-alcoholic beverages prices increased by 1.09%. Similarly, health and education charges went up by 6.02% and 15.14%, respectively.

Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 5.97% in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 3.16%. Price of clothing and footwear increased by 6.61% and furnishing and household equipment maintenance charges 6.22%.

Recreational charges and those related to culture went up by 6.78% in the period under review, while amounts charged by restaurants and hotels by 5.26% in September 2018 as compared to the same month last year.

In food commodities, price of pulse gram increased by 2.87%, Gur price enhanced by 2.74%, spices price went up by 1.32% and wheat prince up by Rs0.77%during September as compared to the month of August.

In non-food commodities, price of personal equipment increased by 2%, education charges enhanced by 1.96%, washing soaps and detergents prices surged by 1.4%, and charges of marriage halls and doctor MBBS fee and cosmetics commodities prices also showed increased during September as against August.

According to the PBS figures, price of tomatoes decreased by 12.03%, onions price reduced by 10.47%, chicken 6.14%, fresh fruits 6.09 percent, eggs 2.81% and gram whole price recorded decline of 0.67% during September over August.

The current account deficit continues to pose a challenge. Despite some growth in workers’ remittances and exports in the first two months of 2018-19, a notable increase in the value of oil imports has kept the current account deficit at $2.7 billion, as compared to $2.5 billion in the corresponding period last year despite non-oil imports declining during the period.

Owing to these developments, SBP’s net liquid FX reserves have declined to $9 billion as of September 19, compared to $9.8 billion at the end of 2017-18.

The State Bank of Pakistan raised key rates by 100 basis points on Saturday to ease inflation fears and plug a widening current account gap.

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