Inflation in Pakistan hits highest in almost 4 years, CPI record 5.8% rise

Inflation in Pakistan hits highest in almost 4 years, CPI record 5.8% rise

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ISLAMABAD: The country’s inflation escalated to 5.8% in August, up from 3.4% in the same month last year. This marks the biggest leap in three years and eight months.

Compared to July 2018, the consumer price index (CPI) showed no significant change in the rate.

Inflation in Pakistan is steadily on the rise, following the recovery in global commodity prices including oil, consolidating domestic demand and depreciation of the rupee, suggested data of Pakistan Bureau of Statistics released on Monday.

The government has projected a 6% annual inflation target for the year 2018-19. The average rate in FY18 was 3.92% versus 4.16% in the year before.

The CPI takes into consideration the prices of nearly 480 commodities every month in urban centres across Pakistan.

In 2017-18, a nearly 14% depreciation in the exchange rate pushed up fuel prices as well as cost of imported goods, while the State Bank of Pakistan raised the policy rate by 100 basis points to 7.5% this fiscal year.

Food inflation was up 3.3% on an annual basis but edged up 0.2% month-wise. Prices of perishable products were higher by 3.15%, while those of non-perishable food items slightly fell by 0.32pc during the month under review.

Food items whose prices increased the most in August were tomatoes, up 47.59%, onions 25.95%, potatoes 6.84%, gram flour 1.43%, meat 1.42%, gur 1.32%, sugar 0.92%, rice 0.91%, honey 0.86%, readymade food 0.6%, jam, tomato ketchup and pickle 0.55%, and spices 0.53%.

In the same category, however, chicken dipped 20.11% month-on-month, betel leaves and nuts 4.59%, fresh vegetables 3.46%, fresh fruits 3.02%, eggs 2.39%, gram whole 0.82%, pulse moong 0.14% and pulse mash 0.10%.

On the other hand, non-food inflation rose 7.6% 0.2% on yearly and monthly basis, respectively.

The increase in non-food inflation is mainly driven by uptick in prices of motor vehicles, crawling up 2.41%, recreation and culture 1.91%, motor fuel 1.43%, utensils 1.21%, construction input items 1.10pc, motor vehicle accessories 0.92%, plastic products 0.85%, kerosene oil 0.74%, medical equipments’ 0.72%, and cosmetics 0.58%.

The non-food prices also remained under pressure on account of education index, which rose to 12.93%, clothing and footwear 6.47%, housing, water, electricity, gas and other fuel 5.97%, furnishing and household equipment 6.2%, health 5.70%, transport 17.26% and recreation and culture 6.91%.

Core inflation, measured by excluding volatile food and energy prices, was recorded at 7.7% year-on-year and 0.2pc on a monthly basis. Core inflation has been steadily rising for the past couple of months.

The gradual build-up of domestic demand is evident in the upswing in core inflation. Of the 89 commodity groups of CPI, it covers the price movement of 43 items. Due to the continuous increase in education and healthcare costs, core inflation remained higher on average compared to the same period last year.

Average inflation, measured through the sensitive price index, crawled up 3.42% in July-August as against negative 0.24% in the previous year, while wholesale price index was up 10.75% from 0.84% in 2017-18.

 

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