ISLAMABAD: The country’s inflation edged up to 5.8 per cent in July from 5.2pc in the preceding month — the biggest increase in three years and eight months.

In the same month last year, inflation stood at 2.91pc.

The price levels, perked up in the first month of the current fiscal year, appear to have been driven by a spike in food inflation in July.

Inflation, measured through the Consumer Price Index (CPI), is steadily on the rise following the recovery in global commodity prices including oil, consolidating domestic demand and depreciation of the rupee, suggested data of Pakistan Bureau of Statistics released on Wednesday.

The government has projected a 6pc annual inflation target for 2018-19. The average inflation in 2017-18 was 3.92pc as compared to 4.16pc in the year before.

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

In 2017-18, nearly 14pc depreciation in the exchange rate has pushed up fuel prices as well as those of imported goods, while State Bank of Pakistan has raised the policy rate by 100 basis points to 7pc.

Food inflation was up 3.5pc on an annual basis but surged 0.6pc on a monthly basis. Prices of non-perishable food items were higher by 0.34pc while those of perishable products by 2.3pc during the month.

Food items whose prices increased the most in July were fresh vegetables, up 22.98pc, tomatoes 15.63pc, eggs 12.01pc, potatoes 9.4pc, onion 6.5pc, spices 3.6pc, sugar 3.24pc, wheat 2.31pc, gur 1.99pc, daal moong 1.87pc, wheat flour 1.72pc, meat 1.65pc, pulse gram 1.47pc, daal masoor 1.4pc and rice 1.14pc.

In the same category, however, chicken dipped 16.91pc month-on-month, fresh fruits 15pc, betel leaves and nuts 8.9pc, pulse mash 0.53pc, and gram whole 0.31pc.

On the other hand, non-food inflation rose 7.4pc on yearly and 1.2pc on a monthly basis.

The increase in the non-food inflation is mainly driven by increase in oil prices in the past few months and the combined impact of the depreciation of the exchange rate. The government passed on this increase to domestic consumers.

The non-food prices also remained under pressure on account of education index, which increased to 12.96pc. Clothing and footwear went up by 6.48pc, housing, water, electricity, gas and other fuel 5.95pc, furnishing and household equipment 5.9pc, health 5.52pc, transport 15.72 pc and recreation and culture 6.44pc.

Core inflation, measured by excluding volatile food and energy prices, was recorded at 7.6pc year-on-year and 1.2pc on a monthly basis. Core inflation has been steadily rising for the past couple of months.

The gradual build-up of domestic demand is evident in the rising core inflation. Of the 89 commodity groups of CPI, it covers the price movement of 43 items. Due to the continuous increase in education and healthcare costs, core inflation remained higher on average compared to the same period last year.

Average inflation measured through the SPI crawled up 3.58pc in July as against negative 0.4pc in the previous year, while WPI was up 10.5pc compared to 0.66pc in 2017-18.

Published in Dawn, August 2nd, 2018