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Inflation surges to 5.8pc

Updated September 04, 2018

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Food inflation was up 3.3pc with tomatoes recording the single largest increase at 47.59pc.
Food inflation was up 3.3pc with tomatoes recording the single largest increase at 47.59pc.

ISLAMABAD: The country’s inflation surged to 5.8 per cent in August, up from 3.4pc in the same month last year – marking the biggest jump in three years and eight months.

Compared to July this year, the consumer price index (CPI) showed no change in the rate.

Inflation 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 Monday.

The government has projected a 6pc annual inflation target for 2018-19. The average rate in FY18 was 3.92pc versus 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, a nearly 14pc depreciation in the exchange rate pushed up fuel prices as well as cost of imported goods, while the State Bank of Pakistan raised the policy rate by 100 basis points to 7.5pc this fiscal year.

Food inflation was up 3.3pc on an annual basis but edged up 0.2pc month-wise. Prices of perishable products were higher by 3.15pc, while those of non-perishable food items slightly fell by 0.32pc during the month under review.

Food items whose prices increased the most in August were tomatoes, up 47.59pc, onions 25.95pc, potatoes 6.84pc, besan 1.43pc, meat 1.42pc, gur 1.32pc, sugar 0.92pc, rice 0.91pc, honey 0.86pc, readymade food 0.6pc, jam, tomato ketchup and pickle 0.55pc, and spices 0.53pc.

In the same category, however, chicken dipped 20.11pc month-on-month, betel leaves and nuts 4.59pc, fresh vegetables 3.46pc, fresh fruits 3.02pc, eggs 2.39pc, gram whole 0.82pc, pulse moong 0.14pc and pulse mash 0.10pc.

On the other hand, non-food inflation rose 7.6pc 0.2pc on yearly and monthly basis, respectively.

The increase in non-food inflation is mainly driven by uptick in prices of motor vehicles, crawling up 2.41pc, recreation and culture 1.91pc, motor fuel 1.43pc, utensils 1.21pc, construction input items 1.10pc, motor vehicle accessories 0.92pc, plastic products 0.85pc, kerosene oil 0.74pc, medical equipments 0.72pc, and cosmetics 0.58pc.

The non-food prices also remained under pressure on account of education index, which rose to 12.93pc, clothing and footwear 6.47pc, housing, water, electricity, gas and other fuel 5.97pc, furnishing and household equipment 6.2pc, health 5.70pc, transport 17.26 pc and recreation and culture 6.91pc.

Core inflation, measured by excluding volatile food and energy prices, was recorded at 7.7pc year-on-year and 0.2pc 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 upswing in 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 sensitive price index, crawled up 3.42pc in July-August as against negative 0.24pc in the previous year, while wholesale price index was up 10.75pc from 0.84pc in 2017-18.

Published in Dawn, September 4th, 2018