ISLAMABAD - Inflation has increased to 5.8 percent in July 2018, highest ever in almost four years, mainly due to sharp depreciation in currency and increase in oil prices.

Inflation measured by Consumer Price Index (CPI) has recorded at 5.8 percent during July over a year ago, according to Pakistan Bureau of Statistics (PBS). It was consecutive second month when inflation is increasing sharply due to the rupee depreciation and increase in petroleum products prices.

The inflation rate had gone up to 5.2 percent in June this year, which was the highest level since October 2014 when inflation stood at 5.8 percent.

The State Bank of Pakistan had recently increased the interest rate by 100 bps to 7.50 percent effective from 16 July 2018. It had noted that inflation would increase in ongoing fiscal year, likely to touch 6-7 percent due to higher fiscal deficit; food inflation reverting to its normal behavior; unfavorable trend in international oil prices and lagged pass-through of rupee depreciation.

Core inflation numbers and their one-year ahead projections at around 7.0 percent also reflect demand pressures. The SBP's projection showed that average headline inflation for FY19 is expected to cross the 6.0 percent annual target. The government has set inflation target at 6 percent for t he ongoing fiscal year 2018-19.

Pakistani currency was under pressure last month as the US dollar once touched historic Rs131. Later, the dollar value stated decreasing and came down to Rs123 after the general election 2018. Similarly, the caretaker government had partially increased the oil prices for July, which resulted in increase in inflation rate during previous month.

According to the PBS, on month-on-month basis, inflation increased by 0.9 percent in July 2018 as compared to a increase of 0.6 percent in the previous month. Meanwhile, core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7.6 percent on annual basis in July 2018 as compared to an increase of 7.1 percent in the previous month and 5.6 percent in July 2017.

The Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 3.58 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 10.5 percent in the period under review.

The break-up of inflation of 5.21 percent showed that food and non-alcoholic beverages prices increased by 3.52 percent. Similarly, health and education charges went up by 5.52 percent and 12.96 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 5.95 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 2.28 percent. Price of clothing and footwear increased by 6.48 percent and furnishing and household equipment maintenance charges 5.9 percent. Recreational charges and those related to culture went up by 6.44 percent in the period under review, while amounts charged by restaurants and hotels by 5.32 percent in July 2018 as compared to the same month last year.

In food commodities, price of fresh vegetables increased by 22.98 percent, tomatoes prices enhanced by 15.63 percent, eggs price went up by 12.1 percent and onions prince up by Rs6.5 percent during July as compared to the month of June. In non-food commodities, price of motor fuel increased by 5.07 percent, charges of transport services enhanced by 4.98 percent, motor vehicles prices surged by 2.53 percent, house rent up by 2 percent and charges of marriage halls and prices of construction input items and kerosene prices also showed increased during July as against June.

According to the PBS figures, price of chicken decreased by 16.91 percent, fresh fruits 15 percent, betel leaves & nuts 8.91 percent, pulse mash 0.53 percent and gram whole price recorded decline of 0.31 percent during July over June.