ISLAMABAD-Inflation rate has further reduced to 8.22 percent in May mainly due to slowdown in economic activities amid coronavirus and reduction in oil prices. This was fourth consecutive month when inflation has reduced after it had touched 12 years highest level of 14.56 percent in January this year.
Later, it had decreased to 12.4 percent in February and 10.24 percent in March, 8.5 percent in April and now in 8.22 percent in May.
The government had reduced the petroleum products prices for the month of May, which had helped in slowing down the inflation rate.
The government had made a massive cut of Rs27.15 per litre in the price of high speed diesel (HSD), reduced the price of petrol by Rs15 per litre and price of light diesel oil (LDO) by Rs15 per litre and kerosene oil by Rs30.01 per litre for the month of May.
Inflation is expected to further decline in the ongoing month of June, as the government had reduced the prices of petroleum products. “The inflation outlook is subject to two-sided risks. Inflation could fall further than expected if economic activity fails to pick up as expected next fiscal year.
On the other hand, there are some upside risks from potential food-price shocks associated with adverse agricultural conditions. Price pressures could also emerge if the economy gains greater momentum in the second half of FY21,” the State Bank of
According to the latest PBS data, inflation has recorded at 10.94 percent in eleven months (July to May) of the current fiscal year. The government had estimated inflation in range of 11 percent and 13 percent for the current fiscal year. The SBP’s projection for average inflation remained at 11 – 12 percent for FY20.
Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 13.95 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 11.13 percent in the period under review.
The break-up of inflation of 8.22 percent in May 2020 showed that food and non-alcoholic beverages prices increased by 12.24 percent. Similarly, health and education charges went up by 9.79 percent and 1.98 percent, respectively.
Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 6.37 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 19.47 percent.
Price of clothing and footwear increased by 10.34 percent and furnishing and household equipment maintenance charges 8.71 percent. Recreational charges and those related to culture went up by 4.93 percent in the period under review, while amounts charged by restaurants and hotels by 8.59 percent in May 2019 as compared to the same month last year.
The PBS has also changed the weights assigned to various consumption items in the goods basket, and introduced a new panel of prices to be obtained from urban and rural areas. As per data, the urban CPI covers 35 cities and 356 consumer items while rural tracks 27 rural centres and 244 items.
In urban areas, the food items which saw their price increased during May 2020 included: chicken (41.46 percent), potatoes (31.19 percent), and fruits (9.72 percent), milk (4.63 percent), condiments and spices (3.71 percent) and Butter (2.58 percent).
Meanwhile, in urban areas, following commodities prices showed decline onions (23.35 percent), vegetables (19.62 percent), eggs (18.74 percent), tomatoes (7.74 percent), pulse gram (7.25 percent), pulse masoor (4.43 percent), Besan (4.38 percent) and wheat (3.37 percent).
In rural areas, the food commodities which prices enhanced included potatoes (41.55 percent), chicken(41.15 percent), fruits(11.46 percent), condiments & spices(8.60 percent), pulse Moong (4.36 percent), Milk (4.23 percent), Gur(2.75 percent) and Pulse Mash(2.13 percent). Meanwhile, prices of following items decreased included tomatoes (21.82 percent), onions (21.77 percent), vegetables (21.08 percent), eggs (13.82 percent), wheat (7.57 percent), pulse gram (2.41 percent) and Besan(2.19 percent).