Inflation in Pakistan picks up to 4.

2pc
Mubarak Zeb KhanUpdated June 02, 2018
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ISLAMABAD: Inflation edged up to 4.2 per cent in May from 3.7pc in the preceding month
owing to an increase in price of non-perishable products and energy costs.

The inflation, measured through the Consumer Price Index (CPI), went up for the second
consecutive month in May after witnessing a declining trend in the past three months, according
to data released by the Pakistan Bureau of Statistics on Friday.

On monthly basis, the CPI-based inflation reached a peak of 4.6pc in December 2017.

The CPI tracks the prices of around 480 commodities every month in urban centres across the
country.

The average inflation in the first 11 months (July-May) of 2017-18 was 3.81pc as compared to
4.18pc in the corresponding period last year. However, it remains below the projected target of
6pc for FY18.

Food inflation went slightly up by 1pc both on annual and monthly basis. This increase was
mainly contributed by prices of perishable food items which were higher by 4.98pc while those
of non-perishable products were up 0.45pc during the month.

Food items whose prices increased the most in May were potatoes, growing by 17.6pc, chicken
7.25pc, fresh fruits 6pc, tomatoes 3.07pc, fresh vegetables 2.62pc, dry fruits 1.83pc, besan
1.71pc, gur 1.34pc, spices 1.3pc, honey 1.25pc, sweat meat 1.22pc, eggs 1.03pc, cereals 0.95pc
and meat 0.84pc.

In the same category, betel leaves and nuts dipped 16.5pc month-on-month, wheat 3.3pc, onion
2.57pc, wheat flour 1.89pc, pulse mash 1.65pc, pulse gram 1.32pc, gram whole 1.11pc, pulse
moong 0.42pc, wheat product 0.31pc and sugar 0.13pc.

Non-food inflation grew by 6.4pc year-on-year, and 0.2pc on a monthly basis. The increase in
the non-food inflation is mainly due to an increase in global crude oil prices in the past few
months whose impact was passed on to the consumers. It will further go up when the oil prices
for June are further passed on to the end consumers.

Core inflation, measured by excluding volatile food and energy prices, was recorded at 7pc year-
on-year, and 0.2pc on a month-on-month basis. It has been steadily rising for the past couple of
months.
Education and health indices rose 13.1pc and 5.22pc respectively on a yearly while a decline of
17.76pc was witnessed in the index of alcoholic beverages and tobacco. Clothing and footwear
rose by 6.7pc, while that of housing, water, electricity, gas and other fuels by 5.53pc.

Published in Dawn, June 2nd, 2018

Pakistan's inflation rate hits 4-year high

IANS/Islamabad
Filed on August 2, 2018 | Last updated on August 2, 2018 at 07.12 am
(Alamy Image)
Pakistan's annual inflation rate expanded to 5.83 per cent in
the month of July.
The Pakistan Bureau of Statistics (PBS) has said that the Consumer Price Index-based inflation
rate in Pakistan has surged to a four-year high in the month of July 2018.

The PBS, which is Pakistani government's official agency to record and release economic
numbers, said on Wednesday that Pakistan's annual inflation rate expanded to 5.83 per cent in
the month of July as against 5.21 percent a month ago and 2.9 per cent in July 2017. This is the
highest inflation rate in Pakistan since September 2014, Xinhua reported.

The Bureau said that escalating prices of petroleum products and four rounds of the devaluation
of Pakistani rupee were the main reasons behind the multi-year highest inflation rate in the
country.

A report from Topline Securities, a brokerage house at the Pakistan Stock Exchange in the port
southern city of Karachi, stated that the CPI-based inflation was expected to average around 7
per cent from the fiscal year of 2017-18 to the fiscal year of 2019-20.
On a monthly comparison, the CPI-based inflation in Pakistan hiked by 0.9 per cent in July 2018
as against an increase of 0.6 per cent in the previous month and a decrease of 0.3 per cent in July
2017.

Pakistan's core inflation, which is calculated by the non-food non-energy CPI surmounted by 7.6
per cent on a yearly basis in July this year when compared with an increase of 7.1 per cent in
June this year and 5.6 per cent in July last year.

World Bank expects the inflation rate to rise to 6 percent by the end of 2017-18

Inflation refers to price rise of important essential commodities like wheat, flour, milk, meat,
medical services and other essential services of life etc. Inflation affects the whole social
framework of society including economy of the country, production and political environment.
Inflation is a deadly disease for developing economies as it imposes high cost on economies and
societies.

Inflation rate in Pakistan averaged 7.79 percent from 1957 until 2018, reaching an all-time high
of 37.81 percent in December of 1973 from a record low of 10.32 percent in February of 1959.
Inflation i.e. Consumer Price Index (CPI) has contracted at 4.4 percent in January 2018 as
compared with the increase of 4.6 percent in the previous month. CPI inflation general increased
by 4.4 percent on year-on-year basis in January 2018 as compared to an increase of 4.6 percent
in the previous month and 3.7 percent in January 2017.

Pakistan has been experiencing a landmark low in the rate of inflation in recent years. It has
fallen steadily from 17 percent in 2008-09 to less than 3 percent in 2015-16, rising marginally to
4 percent in 2016-17. The major factor contributing to this is the nominal stability in the
exchange rate combined with a big fall in international commodity prices of 42 percent since
2014.

The global price of oil has declined globally by almost 56 percent since 2014. This has been
communicated partially to lower domestic prices of petroleum products.

Recent trends in the rate of increase in the consumer price index follow the same pattern. The
first four months have seen an average monthly rate of inflation, on a year-to-year basis, of 3.8
percent. In particular, food prices on the whole have shown hardly any increase. The ‘core’ rate
of inflation, excluding food and energy prices, has exhibited a modestly rising trend. It was 4.2
percent in 2015-16 and 5.2 percent in 2016-17. During the first four months of 2017-18 it stood
at 5.5 percent.

Other factors which have restricted inflation are the controlled rate of monetary expansion
annually of about 13 percent during the tenure of the IMF program. Currently, even though the
rate of inflation in Pakistan is very low it is still above that of countries like India, Indonesia,
Philippines and Thailand. The two noteworthy exceptions are Turkey and Egypt, with rates of
inflation of 11 and 32 percent respectively.
The SBP, IMF and the ADB have all made similar projections of the average inflation rate of 4.5
percent to 5 percent for 2017-18. The World Bank expects the inflation rate to rise to 6 percent
by the end of 2017-18. Given that the inflation rate was 3.8 percent in the first four months, the
expectation is that it will rise in the latter part of 2017-18 to between 4.5 percent and 5.5 percent.

Recent events may have added substantially to inflationary pressures. With the rise in
international oil prices, the government has raised petroleum prices sharply. As elections
approach, the government will pass on the price increases on to consumers or it will start
adjusting downwards the GST rate, especially on HSD, to reduce the price shock

Expectations of future oil prices have been raised substantially by the earlier agreement between
Russia and Saudi Arabia to restrict their oil exports. The price of oil could rise by over 15
percent during the next one year. The other key factor relates to the policy that will be followed
with regard to depreciation of the rupee in coming months.

The historical experience is that the rate of inflation rises on average by about three percentage
points due to a depreciation in the value of the rupee by 10 percent. The expectation of a big
once-and-for-all devaluation will increase if the foreign exchange reserves get depleted further.

In 2016-17, borrowing from the SBP approached Rs 900 billion. This year it could rise to well
above Rs 1 trillion, thereby putting pressure on the rate of expansion of the money supply.
Inflation may, unfortunately, start rising substantially once again from the very low rate
currently.

The State Bank of Pakistan observed that people are complaining for the last several months that
price-hike was making their lives sad. It is becoming very difficult for a common man to make
both ends meet. The government is preparing to present next year financial budget as the general
election is approaching.

According to the government the price of common commodities are stable even though different
institutions including the Federal Bureau of Statistics are claiming otherwise. The SBP has
warned that inflation is all time high in two years and steps should be taken to address the
worsening situation.

Government claim about price stability is contradicted by huge rise in prices of almost all items
of daily use including wheat flour, pulses, edible oil and milk besides vegetables and fruit. Rice
in prices has also witnessed a jump in the last few months.

Industrialists and manufacturers including pharmaceutical companies have also increased prices
of their products especially in the backdrop of rising prices of petroleum products whereas
service providers too have increased their rates.

According to data released by the Pakistan Bureau of Statistics inflation has steadily been on the
rise. High inflation rates are regarded harmful to economy in many ways. During high inflation
rates companies can’t make budget for long-term and it affects production. It disturbs them their
future planning and discourages the investors to invest. The other negative aspects inflation
cause to increase invisible tax.

The State Bank has been very keen in listing almost all the factors which increases the inflation.
The government should take the present situation seriously and should bring it down to a low
level. Remedial measures should be taken as price hike is playing devastation with budget of the
people in the absence of any corresponding increase in salaries and relief for the poor.

Inflation measured through Consumer Price Index (CPI) has recorded at 3.8 percent in February
2018 as against the same month of the previous year, according to the latest data of Pakistan
Bureau of Statistics (PBS).

The inflation had recorded at more than 4 percent during last three months (November to
January). Due to increase in inflation, the State Bank of Pakistan had raised the interest rate to 6
percent to pre-empt overheating of the economy and inflation breaching its target rate. The
central bank has also warned that inflation would increase in the months to come due to impact
of rupee depreciation and rising international oil prices.

The federal government is continuously increasing the petroleum products prices from last
several months. Apart from the SBP, the economic experts also believed that rising oil prices
would fuel the inflation rate. The government on once again increased the price of petrol by
Rs3.56 per litre, high speed diesel by Rs2.62 per litre, superior kerosene oil Rs6.28 per litre and
light diesel oil by RE1 per liter for the month of March. The increase in oil prices would increase
the transportation charges, which directly impact the prices of basic food commodities.

The CPI-based inflation was recorded at 3.84 percent during first eight months (July-February)
of the current fiscal year. The government and the SBP believed that the average inflation for the
current financial year is projected to fall in the range of 4.5 to 5.5 percent, end of fiscal year-on-
year inflation is likely to inch towards the annual target of 6 percent.

Wholesale Price Index - WPI

What is the 'Wholesale Price Index - WPI'

The wholesale price index is an index that measures and tracks the changes in the price of goods
in the stages before the retail level. WPI shows the average price change of goods included in the
index and is often expressed as a ratio or percentage, and the change is one indicator of a
country's level of inflation. Although many countries and organizations use WPI, many other
countries, including the United States, use the producer price index instead.

Next Up

1. Producer Price Index - PPI

2. Import And Export Price indexes ...
 3. Indexing
4. Total Return Index
5.

BREAKING DOWN 'Wholesale Price Index - WPI'

WPI compares the total costs of the goods being considered in one year with the total costs of
goods in the base year. To illustrate, imagine 2010 is the base year. The total prices for that year
are equal to 100 on the scale. Prices from another year are compared to that total and expressed
as a percentage of change. For example, if the total price of the goods under consideration in
2010 was $4,300, and the total for 2015 is $5,000, the WPI for 2015 with a base year of 2010 is
116, indicating an increase of 16%.

What Products Does the WPI Include?

WPI typically take into account commodity prices, but the products included vary from country
to country, and they are subject to change as needed to better reflect the current economy. Some
small countries only compare the prices of 100 to 200 products, while large industrial countries
like the United Kingdom and the United States tend to include thousands of products in their
WPI.

The United States includes commodities at various stages of production, and as a result, many
items are counted more than once. For example, the index includes cotton prices for raw cotton,
cotton yarn, cotton gray goods and cotton clothing. In addition, the United States also includes
crude materials, consumer goods, fruit, grains and apples, and it creates indexes for nearly 100
subgroups. However, it's important to note that the United States no longer uses the WPI. Instead
it uses the producer price index.

What Is the Difference Between the WPI and the PPI?

The United States first began measuring its WPI in 1902, but in 1978, it changed the name of the
measured index to PPI. Prior to this point, the United States only measured its economy with the
WPI, but upon making the shift, the country began to embrace several indexes including the PPI
and the consumer price index. Based on data collected by the Bureau of Labor Statistics, the PPI
relies on the same calculations as the WPI. However, the name is more accurate. WPI,
unfortunately, is not restricted to wholesale goods, making the name slightly misleading.

Read more: Wholesale Price Index (WPI) https://www.investopedia.com/terms/w/wpi.asp#ixzz5SYrYPjjI

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CPI, SPI inflation trends reviewed

 January 8, 2017
132

Islamabad

The National Price Monitoring Committee (NPMC) reviewed the inflation trends based on
Consumer Price Index (CPI) and Sensitive Price Indicator (SPI). The meeting of the committee
was chaired by Finance Minister, Senator Mohammad Ishaq Dar while it was attended by the
representatives from the Provinces of Punjab, Sindh, Khyber Pakhthunk-hwa, Islamabad Capital
Territory, Ministries of Industries, Law and Justice, Commerce, National Food Security and
Research, Cabinet, Planning Development and Reforms, Inter Provincial Coordi-nation,
Statistics Division, Pakistan Bureau of Sta-tistics, Utility Stores Corporation and Federal Board
of Revenue.
The meeting was informed that the headline inflation measured by CPI increased by 3.7% in
December 2016 compared to 3.8 percent of previous month and 3.2% of December last year. On
average during Jul-Dec FY 2017 it is recorded at 3.88% as compared to 2.08 % in corresponding
period last year.
On monthly basis the CPI and food inflation remained lowest by -0.7% and -1.9% since
February 2015. The CPI is tamed down and in control while the other inflationary indicators
have also been con-tained. The meeting noted continuous decline of SPI since last week of
November 2016 and it recorded continuous six weekly decline which has brought food inflation
to 3.0 percent in December 2016 compared to 3.3 percent of previous month while non food
inflation remained at same level of previ-ous month at 4.2 percent, whereas core inflation
increased by 5.2 percent compared to 5.3 percent of previous months and SPI and WPI in
December 2016 recorded at 0.5 percent and 3.1 percent respec-tively, compared to 0.6 percent
and 2.6 percent of previous month.
The Sensitive Price Indicator (SPI) for the week ended on 5th January 2017 decreased by 0.12%.
Out of 53 items, Nine (09) items which recorded de-crease in their prices are tomatoes 10.20%,
Potatoes 5.02%, Chicken 4.63%, Mash Pulse 1.29%, Onions 0.91%, Garlic 0.87%, Moong Pulse
0.57%, Masoor Pulse 0.06% and Red Chilly Powdered 0.05%. The decrease in prices of 09 items
brought an impact of 0.26 percent in SPI decline. Sixteen (16) items re-corded increase in prices
including Sugar 1.64%, Eggs 1.55%, Bananas 1.51%, LPG 1.22%, Rice Irri-6 0.61%, Rice
Basmati 0.47%, Mutton 0.38%, Wheat 0.17%, Vegetable Ghee tin 0.13%, Gram Pulse 0.10%
and Wheat Flour 0.08%. The prices of twenty eight (28) items remained stable which shows that
there is overall price stability in the country.
The meeting noted the price movement of es-sential items on month on month and year on year
basis. It was observed that prices of wheat, wheat flour, chicken, onion, tomatoes, cooking oil,
vegeta-ble ghee, masoor pulse, moong pulse, mash pulse decreased in December 2016 compared
to corre-sponding month of last year.—APP