ISLAMABAD: The inflation rate fell to 12.4 per cent in February from 14.6pc the previous month because of various measures taken by the government to contain inflation, the Pakistan Bureau of Statistics (PBS) stated on Monday.
For the first time since July 2019, inflation measured by the Consumer Price Index (CPI) has seen downward trend owing to a combination of measures, including improvement in supply of essential kitchen items and State Bank’s tight monetary policy.
Prime Minister Imran Khan took to Twitter to appreciate cabinet’s decisions that led to reduction in inflation, including subsidy on products through utility stores. “We will continue pursuing measures to bring down inflation and reduce burden on citizens,” he said.
It has been observed that the prices of essential food items, especially vegetables and fruits, are higher in rural areas than in urban areas. In rural areas, the price of LPG cylinders used for cooking purpose has witnessed the highest-ever increase since 2013.
PM tweets ‘we will continue pursuing measures to bring down inflation and reduce burden on citizens’
Food inflation in urban areas rose by 15.5pc in February on a yearly basis and dipped by 1.4pc on a monthly basis, whereas it increased by 19.7pc and declined by 1.6pc, respectively, in rural areas.
It clearly shows that food inflation is very high in rural areas where most of the population lives, which is an unprecedented phenomenon. One of the reasons for it is imposition of regulatory duties on vegetables and fruits to discourage its imports from Afghanistan and Iran. And locally produced fruits and vegetables are being sold in urban markets because of higher prices.
In urban areas, the food items which saw an increase in their prices include: vegetable ghee (13.15pc), cooking oil (10.27pc), sugar (8.45pc), mustard oil (4.25pc), fresh fruits (4.16pc), beans (3.89pc), chicken (2.35pc), pulse moong (2.27pc) and pulse mash (1.14pc). The items whose prices declined in urban areas include: tomatoes (60.27pc), eggs (26.36pc), potatoes (12.91pc), fresh vegetables (11.48pc), onions (8.79pc), wheat flour (5.29pc), wheat (3.52pc), pulse gram (2.34pc) and besan (2.33pc).
In rural areas, the food items which saw an increase in their prices include: sugar (8pc), vegetable ghee (6.23pc), condiments and spices (5.99pc), chicken (5.76pc), pulse mash (5.13pc), pulse masoor (4.27pc), pulse moong (3.94pc), fresh fruits (3.56pc), beans (2.99pc), cooking oil (2.54pc) and mustard oil (1.63pc).
With the arrival of crops, especially vegetables, in Punjab in March, it is predicted that food prices will come down further. The prices of tomato, onion, potato and other vegetables will come down in March.
Similarly, non-food inflation in urban centres was recorded at 9.1pc year-on-year, while it dropped by 0.9pc on a monthly basis. Non-food inflation in rural areas was 9.8pc year-on-year and dropped by 0.4pc on a monthly basis.
The slight decline in non-food inflation is mainly driven by a drop in oil prices over the past few months. The reduction in oil prices in March will lead to further drop in non-food inflation.
The average inflation between July 2019 and Feb 2020 stood at 11.7pc as against 6pc over the corresponding months last year.
The International Monetary Fund has estimated that the country’s inflation may rise as high as 13pc; however, the government estimates that it will remain within the range of 11-13pc for the current fiscal year. The Asian Development Bank in its outlook projected annual inflation in Pakistan at 12pc.
The urban CPI covers 35 cities and 356 consumer items, while the rural CPI tracks 27 rural centres and 244 items. The former dipped by 11.2pc year-on-year in February, whereas the latter jumped by 14.2pc.
The core inflation rate in urban areas was 8pc in February as against 7.9pc the previous month, according to the new methodology. The core inflation rate in rural areas was 9.4pc in February, while it was 9pc in the previous month.
The central bank determines the key policy rate — currently at 13.25pc — on the basis of the core inflation rate.
Average inflation measured by the Sensitive Price Index crawled up to 15.25pc during the July-February period from 2.74pc during the same period last year, while the Wholesale Price Index dipped to 13.49pc from 15.95pc.
In a series of tweets, Special Assistant to the Prime Minister on Information Dr Firdous Ashiq Awan has said Prime Minister Khan is determined to check inflation and provide relief to the masses. She said the fruits of practical steps towards that end have started reaching the masses.
Alluding to the declining trend witnessed in the prices of essential commodities during the month of February, she said that apart from food items, the prices of other essential items had also reduced to single digit. She said the people were directly benefitting from this fall in prices of essential items, adding that the prices were expected to come down further during the current month.
Published in Dawn, March 3rd, 2020