KARACHI: Annual consumer inflation inched down to 6.2 percent in December compared to 6.5 percent in the previous month as food inflation remained benign despite rupee depreciation, analysts said on Wednesday.
Pakistan Bureau of Statistics (PBS) data showed that consumer price index (CPI) inflation is, however, still above the 4.6 percent reading in December 2017. CPI inflation decreased 0.4 percent on month-on-month basis in December 2018 as compared to an increase of 0.1 percent in the previous month and decrease of 0.1 percent in December 2017.
CPI inflation was recorded at an average 6.05 percent for the July-December period as against 3.75 percent in the corresponding period of the last fiscal year and 3.88 percent in the first half of 2016/17.
Analyst Mirat Hyder at Taurus Securities expected inflation to remain under 8.86 percent on an average in 2HFY2019. “Hikes in the cost of utilities (most notably the revision of the electricity tariff), can push inflation upwards of eight percent year-on-year,” Hyder said.
Housing, water, electricity, gas and fuel costs, which account for almost 30 percent of the CPI basket, witnessed a 9.08 percent surge in December 2018 over the same month a year earlier.
“Despite the significant rupee devaluation, food inflation remained benign and has averaged 2-2.5 percent during 2018,” Topline Research said in a flash note. “This is likely because of better and sustained food supplies. We expect food inflation to increase on the back of expected rise in energy prices and lagged impact of rupee devaluation.”
Rupee lost a quarter of its value against the US dollar during the last year. Topline Research anticipated consumer inflation to average 7.5 percent during the current fiscal year. “The rise in 2HFY19 is because of expected further hikes in energy prices and likely increase in taxation measures to bridge the yawning fiscal gap.”
The State Bank of Pakistan forecast consumer inflation in the range of 6.5 to 7.5 percent in FY2019. Bulk of the non-food and non energy items exhibited monthly increase of more than 60 basis points in December, according to Topline Research.
Core inflation measured by non-food non-energy CPI increased by 8.4 percent on year-on-year basis in December 2018 as compared to an increase of 8.3 percent in the previous month and 5.5 percent in December 2017.
Core inflation increased 0.3 percent month-on-month in December 2018 as compared to an increase of 0.4 percent in previous month, and an increase of 0.2 percent in December 2017. Food items that witnessed decrease in prices last month over the same month a year ago included tomatoes (56.3pc), onion (53.45pc), potatoes (36.09pc), fresh vegetables (27pc), gram whole (9.35pc), eggs (9.05pc), pulse mash (6.32pc) and besan (3.17pc).
Prices of spices increased 14.95 percent year-on-year in December, followed by meat (13.21pc), honey (12.43pc), tea (11.11pc), dry fruits (10.43pc), rice (8.89pc), chicken (8.86pc) and sweet meat (7.95pc).
Prices of honey rose 5.61 percent month-on-month in December, followed by pulse moong (4.06pc), pulse gram (2.96pc), beans (2.71pc), pulse mash (2.55pc), pulse masoor (2.29pc), cooking oil (1.92pc) and dry fruits (1.74pc).
In December, prices fresh vegetables fell 21.78 percent over November, followed by tomatoes (21.14pc), potatoes (20.23pc), onions (13.23pc), chicken (6.8pc), fresh fruits (1.83pc) and eggs (1.31pc).