Inflation hits double digits again due to hike in basic food commodities prices

ISLAMABAD   –  Inflation rate is continuously increasing as it entered into double digits figure by touching 11.1 per cent in the month of April due to hike in basic food commodities prices. 

Inflation measured through Consumer Price Index (CPI) was recorded at 11.1 per cent in April 2021 as against 9.1 per cent in March, according to the latest data of Pakistan Bureau of Statistics (PBS).

Inflation is increasing from last few months. Earlier, in January 2021, inflation had eased to 5.7 per cent. However, since February, inflation is increasing mainly due to increase in basic food commodities prices. On month-on-month basis, it increased by 1 per cent in April 2021 as compared to an increase of 0.4 per cent in the previous month (March). 

Inflation remained higher than the projection of ministry of finance in the last month. The ministry noted that inflation is expected to remain between 8.0 – 9.5 per cent in April. However, it was recorded at 11.1 per cent. However, from the beginning of the next fiscal year, assuming the absence of any new supply shocks, favourable base effects may start to drive Y-o-Y inflation to lower levels. 

“Recent increases in international and domestic energy prices are expected to have transitory effects on inflation,” the ministry of finance in its recent report. However, recent government interventions to improve the functioning of domestic foods markets and the assuring of sufficient supply to some of these markets are expected to be permanent measures. Thus not only affecting the CPI level, but also future inflation is expected to come down as compared to the scenario when these measures would not have been taken.

The recent rising trends in international commodity prices and domestic energy prices may still exert temporary second-round effects on inflation in the short run, which may be neutralized by the aforementioned government interventions and a strong exchange rate. 

According to the latest PBS data, the CPI-based inflation was recorded at 8.62 per cent in the first ten months (July to April) of the current fiscal year. Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 12.85 per cent. Similarly, the wholesale price index (WPI) based inflation enhanced by 7.36 per cent in the period under review. 

The break-up of inflation of 11.1 per cent showed that food and non-alcoholic beverages prices increased by 15.91per cent. Similarly, health and education charges went up by 8.97 per cent and 1.55 per cent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 9.68 per cent in the last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 4.92 per cent 

Prices of clothing and footwear increased by 11.87 per cent and furnishing and household equipment maintenance charges 9.45 per cent. Recreational charges and those related to culture went up by 4.57 per cent in the period under review, while amounts charged by restaurants and hotels by 8.2 per cent in April 2021 as compared to the same month last year. 

In urban areas, the food items which saw their prices increased during April 2021 included tomatoes (67.7 per cent), vegetables (29.55 per cent), fruits (22.32 per cent), potatoes (15.81 per cent), chicken (7.31 per cent), cooking oil (2.99 per cent), vegetable ghee (2.01 per cent), meat (1.64 per cent), condiments and spices(1.54 per cent), and gram whole (1.25 per cent).

In non food commodities, charges of tailoring increased by 4.50 per cent, household equipment charges enhanced by 1.79 per cent, house rent up by 1.64 per cent, hosiery (1.46 per cent) and construction input items (1.42 per cent). 

In urban areas, prices of following items reduced: onions (8.33 per cent), wheat flour (1.94 per cent), sugar (1.83 per cent) and pulse moong (1.59 per cent). In non food commodities, prices of liquefied hydrocarbons declined by 3.80 per cent, electricity charges 1.89 per cent, motor fuel (1.52 per cent) and solid fuel (0.37 per cent). 

In rural areas, prices of following commodities increased: tomatoes (55.54 per cent), fruits (25.20 per cent), vegetables (21.71 per cent), potatoes (12.15 per cent), cooking oil (2.25 per cent), vegetable ghee (1.83 per cent), meat (1.59 per cent) and mustard oil (1.15 per cent). In non food items, charges of tailoring enhanced by 2.03 per cent, readymade garments (1.94 per cent), household equipment (1.49 per cent), cotton cloth (1.41 per cent), house rent (1.16 per cent) and clinic fee (1.12 per cent).

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