ISLAMABAD: The inflation climbed to 13.4 per cent in April a two-year high from 12.7pc in the previous month on the back of a persistent increase in prices of perishable and non-perishable products, according to the Pakistan Bureau of Statistics data released on Monday.

The inflation — measured by the Consumer Price Index (CPI) — is steadily on the rise since March undermining earlier gains. The increase in CPI could have been much higher had the previous government not frozen oil prices at the current level since March.

All the three indicators—CPI, Sensitive Price Index (SPI) and Wholesale Price Index (WPI) measuring inflation saw an unprecedented spike in April.

Average inflation measured by the SPI increased to 14.2pc in April from 13pc a month earlier, while the WPI surged to 28.1pc during the month under review from 23.8pc. The excessive increase in WPI indicates an increase in the prices of non-perishable products in the coming months.

Sales tax on all POL products has been reduced to zero and also on palm oil. However, the crisis is still looming for the edible oil sector as Indonesia being the biggest exporter of palm oil has suspended supplies due to local shortages.

Similarly, the decision to increase electricity charges will increase bills for consumers. These factors are likely to add to the non-food inflation.

In Pakistan, the average inflation in the first 10 months of FY22 rose to a double-digit and was recorded at 11.04pc. In 2020-21, annual CPI inflation was recorded at 8.90pc against 10.74pc the previous year.

According to the Ministry of Finance’s economic update and outlook for April, the overall spike in CPI is on account of an increase in the prices of imported items as the country is a net importer of such items, especially crude oil, pulses and edible oil, which ultimately transmitted into domestic prices. Upward price movement is further fuelled by the Ukraine war, supply chain disruption and recovery in global demand.

It further said high international commodity prices not only keep inflation elevated, but are also a burden on Pakistan’s external account and hence on its foreign exchange reserves.

Bullish food prices

The PBS data showed that the food inflation remained on the higher side in the first 10 months of FY22, as it shot up to 15.6pc year-on-year in April and 3.7pc month-on-month in urban areas, whereas the respective growth in prices in rural areas was 17.7pc and 2.8pc — a reversal of the trend where urban areas usually experience higher food prices.

At the same time, prices of meat, fruit and vegetables also registered a persistent increase in major urban and rural centres mainly due to higher demand in Ramazan and traders took undue advantage of an ineffective price regulatory system.

Normally, the traders charged higher prices for perishable products that saw an increase of 42.42pc in April over the previous month.

Non-food inflation in urban centres increased by 10.2pc year-on-year and 0.3pc month-on-month, whereas in rural areas it rose by 12.8pc and 0.5pc, respectively. The increase in non-food inflation was mainly driven by rising oil prices. The growth deceleration in non-food inflation was mainly due to the freezing of petroleum prices by the PTI government since March.

Food items that saw an increase in prices in April as compared to the previous month, included tomatoes 51.53pc, onions 42.83pc, fruits 21.07pc, vegetables 14.41pc, cooking oil 11.35pc, vegetable ghee 8.26pc, gram whole 5.67pc, wheat flour 3.45pc, meat 3.25pc, mustard oil 2.31pc, potatoes 1.43pc, milk 1.27pc and pulse masoor 1.13pc.

In urban areas, the prices of chicken declined 9.40pc, gur 1.23pc and sugar 0.70pc. A similar trend of increase was noticed in the prices of essential food and non-food items in the rural areas.

At the same time, non-food items that saw an increase in April as compar1ed to the previous month included tailoring 6.37pc, motor vehicles 5.42pc, hosiery 4.41pc, household equipment 3.88pc, cotton cloth 2.05pc, construction input Items 1.84pc, readymade garments 1.37pc, washing soap, detergents, matchbox, 1.36pc each and furniture & furnishing 0.95pc.

The core inflation in urban areas was 9.1pc in April against 8.9pc the previous month. In rural areas, the corresponding increase was 10.9pc against 10.3pc.

Published in Dawn,May 3rd, 2022

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