Inflation touches 4-year high

ISLAMABAD  –  Inflation rate has touched four years’ highest level of seven percent in October 2018 due to sharp depreciation in rupee against dollar and massive increase in gas prices.

According to Pakistan Bureau of Statistics (PBS), inflation measured by Consumer Price Index (CPI) has recorded at seven percent during October 2018 as against the same period of last year. Inflation has touched the four years’ highest level last month due to sharp depreciation in rupee against the dollar and massive increase in gas prices.

Pakistan’s rupee had devalued by Rs10 last month as US dollar increased to Rs134. The government had also implemented the new gas prices from the start of October. The gas prices were increased up to 143 percent for different sectors. The economic experts believed that inflation may further fuel in the months to come as the government recently enhanced the power tariff and petroleum products prices.  The federal government last month had warned that inflation would rise in the months to come due to increase in oil prices in international market, rupee depreciation and recent hike in gas rates.

The power tariff was enhanced by Rs1.27 per unit for the consumer using more than 300 units in a month. Similarly, the government had also increased the prices of petroleum products. The government on Wednesday increased the prices of high speed diesel (HSD) by Rs6.37 per litre and motor spirit (petrol) by Rs5 per litre for the month of November 2018. The price of light diesel oil (LDO) was also increased by Rs6.48 per litre and super kerosene oil by Rs3 per litre. Prices of petroleum products are directly linked with the prices of essential commodities.

The International Monetary Fund (IMF) in recent talks with Pakistan had estimated that inflation rate may touched 14 percent during ongoing fiscal year. For FY19, State Bank of Pakistan (SBP)’s inflation projections show that the average headline inflation is expected to fall in the revised forecast range of 6.5-7.5 percent. Earlier, the previous PML-N government had projected inflation at 6 percent for the ongoing fiscal year. However, the incumbent government admitted that inflation would increase due to some of its economic decisions.

According to the latest data of PBS, the CPI based inflation has recorded at 5.95 percent during first four months (July to October) of the ongoing fiscal year. Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 2.3 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 10.95 percent in the period under review.

According to the PBS, on month-on-month basis, inflation increased by 2.6 percent in October 2018 as compared to a decrease of 0.1 percent in the previous month. Meanwhile, core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.2 percent on annual basis in October 2018 as compared to an increase of 8 percent in the previous month and 5.3 percent in October 2017

The break-up of inflation of 7 percent in October 2018 showed that food and non-alcoholic beverages prices increased by 2.04 percent. Similarly, health and education charges went up by 9.21 percent and 11.54 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 9.87 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 12.68 percent. Price of clothing and footwear increased by 6.73 percent and furnishing and household equipment maintenance charges 6.99 percent.

Recreational charges and those related to culture went up by 8.57 percent in the period under review, while amounts charged by restaurants and hotels by 4.77 percent in October 2018 as compared to the same month last year.

In food commodities, price of chicken increased by 35.25 percent, eggs price enhanced by 14.41 percent, cigarettes price went up by 9.67 percent, tomatoes price by 3.85 percent and other fresh vegetables by 3.7 percent during October as compared to September. In non-food commodities, price of gas increased by 104.91 percent, newspapers charges enhanced by 15.9 percent, communications and apparatus price surged by 7.54 percent, and doctor MBBS fee enhanced by 3.39 percent. Meanwhile, charges of water supply, medical tests, transport services, motor vehicle accessories and construction input items have also recorded increase during the period under review.

According to the PBS figures, price of onions decreased by 4.43 percent, fish price reduced by 1.38 percent, pulse mash price down by 1.18 percent and gram whole price also recorded minor decline. Meanwhile, in non-food commodities, price of kerosene oil has registered minor reduction of 0.22 percent during October as against September.


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