ISLAMABAD - Inflation increased to 4.2 percent in May mainly due to hike in prices of food commodities during Ramazan.

Inflation measured by Consumer Price Index (CPI) was recorded at 4.2 percent during May over a year ago, according to Pakistan Bureau of Statistics (PBS). Inflation increased during May after continuously declining in last couple of months. The CPI-based inflation was recorded at 3.81 percent during first eleven months (July-May) of the current fiscal year. The State Bank of Pakistan had projected the average inflation for FY18 to remain within SBP’s model-based range of 3.5-4.5 percent.

“A significant change in the outlook for international oil prices with its impact on upward adjustments in domestic oil prices, a strong demand, the lagged pass-through of exchange rate adjustments, food inflation maintaining its current course and the stoking of survey-based measures of inflationary expectations will largely determine the inflation path in the remaining period of FY18 and for FY19,” the SBP noted in its monetary policy. The SBP increased the policy rate by 50bps to 6.50 percent effective from Monday 28 May 2018.

According to the PBS, on month-on-month basis, inflation increased by 0.3 percent in March 2018 as compared to a decrease of 0.3 percent in the previous month. Meanwhile, core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7 percent on annual basis in May 2018 as compared to an increase of 7 percent in the previous month and 5.5 percent in May 2017.

The Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 0.78 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 3.09 percent in the period under review.

The break-up of inflation of 4.2pc showed that food and non-alcoholic beverages prices increased by 2.07pc. Similarly, health and education charges went up by 5.22pc and 13.1pc, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 5.53 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went down by around 17.76 percent.

Price of clothing and footwear increased by 6.7 percent and furnishing and household equipment maintenance charges by 5.53 percent. Recreational charges and those related to culture went up by 6.22 percent in the period under review, while amounts charged by restaurants and hotels by 5.58 percent in May 2018 as compared to the same month last year.

In food commodities, price of potatoes increased by 17.62 percent, chicken prices enhanced by 7.25 percent and fresh fruit price went up by 6.01 percent during May as compared to the month of April. In non-food commodities, charges of water supply increased by 6.76 percent, motor fuel 1.54 percent, kerosene oil price enhanced by 1.29 percent, charges of transport service increased by 0.79 percent and construction wage rates also recorded minor increase.

According to the PBS figures, price of betel, leaves and nuts decreased by 16.52 percent, wheat 3.3 percent, onion 2.57 percent, wheat flour 1.89 percent, pulse mash 1.76 percent and other pulses prices also recorded decline during May over April.