CPI inflation decelerates to 11.53 percent in March

ISLAMABAD                   –                Inflation rate has slowed down to 11.53 percent in March mainly due to decline in oil prices in the country that helped in reducing prices of food commodities.

This was second consecutive month when inflation has reduced after it had touched 12 years highest level of 14.56 percent in January this year. Later, it had decreased to 12.4 percent in February and 11.53 percent in March mainly due to reduction in prices of petroleum products and food commodities. The latest data of Pakistan Bureau of Statistics (PBS) showed that inflation, measured through the Consumer Price Index (CPI), has recorded at 11.53 percent in March 2020 over a year ago.

The government had reduced the petroleum products prices up to Rs7 per liter for the month of March, which had helped in slowing down the inflation rate. The government had now reduced the oil prices by Rs15 per liter for the ongoing month of April. However, the economic experts are of the view that reduction in oil prices might be offset by massive devaluation in local currency and artificial price hike due to coronavirus pandemic. The dollar value has gone to around Rs165-166 recently, which was around Rs155 in early March.  The government had announced relief package worth of Rs1.2 trillion to minimize the adverse impact of the coronavirus outbreak on the country’s poor people and economy.

The inflation is still in double digits. The State Bank of Pakistan had recently cut its benchmark policy rate by 150 basis points to 11 percent. According to the latest PBS data, inflation has recorded at 11.53 percent in nine months (July to March) of the current fiscal year. The government had estimated inflation in range of 11 percent and 13 percent for the current fiscal year. The SBP’s projection for average inflation remained at 11 – 12 percent for FY20. Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 14.85 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 12.99 percent in the period under review.

The break-up of inflation of 11.53 percent in March 2020 showed that food and non-alcoholic beverages prices increased by 14.69 percent. Similarly, health and education charges went up by 12.41 percent and 4.51 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 4.9 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 18.57 percent. Price of clothing and footwear increased by 10.97 percent and furnishing and household equipment maintenance charges 10.14 percent. Recreational charges and those related to culture went up by 5.92 percent in the period under review, while amounts charged by restaurants and hotels by 8.66 percent in March 2019 as compared to the same month last year.

The PBS has also changed the weights assigned to various consumption items in the goods basket, and introduced a new panel of prices to be obtained from urban and rural areas. As per data, the urban CPI covers 35 cities and 356 consumer items while rural tracks 27 rural centres and 244 items.

In urban areas, the food items which saw their price increased during March 2020 included: onions(35.07 percent), potatoes(10.93 percent), fresh fruits(8.53 percent), chicken (3.25 percent), milk powder (1.86 percent), mustard oil(1.7 percent), eggs (1.62 percent), condiments and spices(1.58  percent),butter(1.24 percent), beans(1.18 percent), gur(1.12 percent), milk fresh (0.96 percent) and meat(0.84 percent)

On the other hand, items that declined in urban were Tomatoes (23.29 percent), Fish (9.25 percent), Wheat (8.43 percent), Fresh vegetables (7.78 percent), Pulse gram (5.13  percent), Pulse masoor(3.39 percent), Wheat flour (3.17 percent), Pulse mash(2.33 percent) and Sugar(0.54 percent).

In rural areas, the food commodities who prices enhanced included onions (40.95  percent), fresh fruits (8.04 percent), potatoes (6.82 percent), beans (3.77 percent) and Vegetable ghee (1.05 percent). Meanwhile, prices of following items decreased tomatoes (36.43 percent), wheat (7.39 percent), fresh vegetables (5.64 percent), pulse gram (5.07 percent), chicken (4.85 percent), pulse masoor(3.45 percent), eggs(3.17 percent), gram whole(2.58 percent), wheat flour(2.52 percent), pulse mash(2.05 percent) and gur(1.02 percent).

Article source: https://nation.com.pk/02-Apr-2020/cpi-inflation-decelerates-to-11-53-percent-in-march