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Thursday, May 23, 2024

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

The inflation rate in Pakistan has reduced to 8.2%, the lowest in recent months, the SBP had said that the spike in inflation was transitionary

Pakistan recorded in August a lower inflation rate as compared to the rate for the last three months, revealed data recently published by the Pakistan Bureau of Statistics.

It was due to a reduction in prices of perishable food items such as fruits, vegetables, cotton seeds, eggs, and pulses, PBS said.

August’s Inflation lowest in recent months

August’s inflation rate of 8.2% was 1.1% lower than the 9.3% inflation rate in the previous month.

The PBS calculates the inflation rate by measuring the prices of a basket of 480 common goods and services such as the cost of education, house rent, utility bills and food and beverages.

Read more: NEPRA drops power bomb on consumers battling rains, inflation

An increase in the inflation rate still means the prices of goods and services went up, but just at a lower rate.

The inflation in the outgoing month can be attributed to an 11.6% increase in the prices of electricity, which was due to fuel prices rising in August. Housing, water, electricity, gas and fuel prices have a weightage of 24% when calculating inflation so a change in its prices always has a major effect on inflation.

The price of spices and onions soared last month, mainly due to the celebration of Eidul Azha.

Rains in Karachi disturbed the supply chain of goods which led to a rise in the inflation rate.

It was a challenge for the Pakistan Tehreek-e-Insaf government to keep a check and balance on the prices of wheat and sugar in the last month. Despite Prime Minister Imran Khan’s interest in controlling the prices, they still increased, affecting the inflation rate.

“Inflation rate in the next month is expected to fall more to 8% according to the trend seen previously,” said Atif Zafar of Topline Securities.

State Bank had claimed that inflation rate was under control

The State Bank of Pakistan (SBP) had declared the spike in inflationary pressure was a ‘transitory’ phenomena, saying that the headline inflation was broadly in line with projection of the central bank.

The spike in inflation had shocked many but the State Bank took the stance that they were expecting this kind of spike, however, it was transitory phenomena and there was no need to bring any change in the earlier made projections.

This correspondent contacted high-ups of Planning Ministry, Finance Ministry and Pakistan Bureau of Statistics (PBS) and many top officials had agreed that the wheat/flour crisis proved to be a catalyst for increasing inflationary pressure during January 2020. House rent, prices of perishable food items and energy prices also pushed up headline inflation up to historic level.

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

The extreme weather conditions had damaged essential food crops such as the crop of tomato was delayed.

The prices of chicken escalated. The major problem arose when the wheat crisis hit the country and its prices escalated in the domestic market. The major contributor was wheat/flour price that fuelled inflation.

GVS News Desk