ISLAMABAD

Pakistan's inflation rate has witnessed sharp increase of 3.2 percent in December following the last month's government decision of imposing Rs40 billion new taxes to bridge its revenue collection shortfall.

Inflation measured by Consumer Price Index (CPI) enhanced by 3.2 percent in previous month as against the same month of the last fiscal year, according to the latest data released by Pakistan Bureau of Statistics (PBS) yesterday. Economic experts said that inflation rate was expected to accelerate after government slapped new taxes to fulfill the condition of International Monetary Fund to get loan tranche of $500 million.

Although, the Rs40 billion new taxes helped the government in achieving the tax target but it also sparked the inflation rate in the country.

Pakistan's inflation rate had remained at lower side during first five months (July-November) of the current fiscal year following tumbling oil prices. It was recorded at 2.7 percent in November, 1.6pc in October, 1.3pc in September, 1.7pc in August and 1.8pc in July this financial year. However, inflation rebounded to 3.2 percent in December.

The international financial institutions IMF and the World Bank, and the central bank had already forecasted that inflation would increase in the second half of the current fiscal year that ends on June 30. The IMF and The WB predicted that inflation would go upto 5 percent during ongoing financial year.

According to the PBS data, the average inflation remained at 2.06 percent during first half (July-December) of the ongoing financial year 2015-2016. Meanwhile, the sensitive price indicator (SPI), which gauges weekly inflation in kitchen items, has increased by 0.26 percent in July to December period as against the same months of last year. Similarly, the wholesale price index (WPI) based inflation decreased by 2.35 percent in the period under review.

According to the data, food and non-alcoholic beverages prices had increased by 1.44 percent and transport charged down by 4.04 percent during December 2015.

Health and education charges went up by 2.56 percent and 8.78 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 4.97 percent in December 2015. Meanwhile, prices of alcoholic beverages and tobacco stood at 25.51 percent, clothing and footwear 4.57 percent and furnishings and household equipment maintenance 3.82 percent. Charges related to recreation and culture went up 2.14 percent and restaurants and hotel 4.57 percent in December 2015 over the same month in 2014.

In food commodities, price of chicken enhanced by 7.24pc, pulse mash 6.08pc, eggs 3.74pc, chicken 2.91pc, tea 2.16pc, betal leaves and nuts 1.91pc, gram whole 1.9pc, dry fruits 1.44pc and besan 1.32pc during the month of December against previous month.

Meanwhile, price of tomatoes decreased by 27.42pc, vegetables 23.92pc, onions 16.55pc, potatoes 15.42pc, sugar 5.08pc, gur 4.6pc, fresh fruits 3.84pc and rice 1.07pc during the period under review.