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Wednesday, May 22, 2024

Inflation rate drops to 5.7%, lowest in two years

The inflation rate went up as high as 14.6% in January 2020, causing the prices of perishable food items to go up as well. 

The inflation rate in Pakistan has dropped to 5.7% in the month of January this year, which is the lowest its been in two or more years, owing to a better supply of perishable food items during winter. The inflation rate went up as high as 14.6% in January 2020, causing the prices of perishable food items to go up as well.

The Minister for Planning and Development, Asad Umar, took to Twitter to announce the news on Sunday. He stated, “Inflation continues to decline. Jan inflation (CPI) is down to 5.7%. Core inflation is at 5.4%. Last month (Jul 2018) prior to PTI govt formation, CPI was 5.8% & core was 7.6%. The rate of inflation is LOWER today than when the PTI govt was formed.”

Read more: Rising inflation: What should Prime Minister Imran Khan do?

Pakistan’s inflation rate has been in a single-digit in January for the past 14 years, except for January 2020, when it hit the record high of 14.6%, the highest it has been in the last 14 years. according to the Pakistan Bureau of Statistics (PBS) data; causing food prices to skyrocket. However, in January 2019, the inflation rate remained 5.6%.

After hitting a record high in 2020, the inflation rate, in the month of January 2021, reduced by 2.2%, the most it has declined in the last 10 months. It has exceeded the Ministry of Finance’s expectations, which has predicted the inflation rate for January to be around 7.2% to 8.2%.

Read more: Inflation rate in Pakistan drops to 8.2%, further reduction expected

The Prime Minister, Imran Khan also tweeted about the occurrence after Asad Umar. The premier stated “More good news on the economic front. Our efforts to reduce inflation are now showing results. The consumer price index & core inflation are both now lower than when our government was formed. I have told my economic team to stay vigilant & ensure that inflation stays under control.”

According to economists, a sharp increase or decrease in inflation rates a month or a year ago is known as “the high base effect” in economics. Hence why the inflation rate dropped from a record high of 14.6% in January 2020 to 5.7% exactly a year later. Better food supply especially of perishable goods during winters as well as improvements in the food items may also account for the reduction in the inflation rate.

Read more: Pakistanis are crying because of rising inflation, Nawaz Sharif