Inflation hits four-year high of 8.2pc in February

KARACHI: Pakistan’s annual inflation reached more than four-year high of 8.2 percent for February as lagged impact of tenuous rupee finally hit the imports-dependent economy by lifting up prices of commodities.

Pakistan Bureau of Statistics (PBS) data on Friday showed that consumer price index (CPI) inflation clocked in at 7.19 percent year-on-year in January. Consumer inflation was at the current level in 2014 and it was registered at 8.2 percent in June 2014.

The central bank has been highlighting the lagged impact of rupee devaluation on inflation numbers in its periodical reports. Rupee lost more than 26 percent against the dollar since December 2016.

On a month-on-month basis, CPI inched up 0.64 percent in February, the PBS data said. Analysts said rupee devaluation as well as increase in prices of perishable items

were the main reasons behind rise in inflation.

“Another key factor is low-base effect. Inflation started to ratchet up from April last year,” Zeeshan Afzal, executive director of Insight Securities said. “I believe the trend may reverse from next month onwards when there will be high base.”

In February, prices of tomatoes increased 179.4 percent year-on-year, followed by ginger (16.21pc), beef (14.42pc), sugar (13.86pc), tea Lipton (13.70pc), mutton (12.79pc), gur (10.82pc), ghee loose (8.30pc), fish (7.90pc), pulse moong (7.89pc), eggs (7.21pc), cooking oil (7.17pc), rice (7.16pc), pulse gram (6.92pc), gram whole black (4.85pc), milk fresh (4.04pc) and wheat (3.21pc).

Prices of onion, however, decreased 32.76 percent in February over the corresponding month a year earlier, followed by potatoes (18.71pc), gram whole yellow (14.21pc), liquefied petroleum gas (13.46pc), chicken (11pc), banana (6.10pc), garlic (5.71pc), bricks (3.52pc), compressed natural gas (1.76pc), iron bar (1.31pc), petrol (0.65pc), kerosene oil (0.54pc), pulse mash (0.46pc), and cement (0.22pc).

Prices of liquefied petroleum gas fell 13.46 percent in February over January, followed by potatoes (8.98pc), coaching fee for class (8.63pc), cabbage (6.5pc), eggs (4.08pc), bricks (3.52pc), garlic (2.97pc), compressed natural gas (1.76pc), iron bar (1.31pc), petrol (0.65pc), kerosene oil (0.54pc), cement (0.22pc), rice basmati (0.21pc), pulse mash (0.19pc), and gram whole yellow (0.13pc).

In February, prices of tomatoes rose 150 percent month-on-month, followed by chillies green (37.43pc), pomegranate (11.24pc), chicken (4.17pc), fish (2.02pc), wheat (1.43pc), motorcycle (1.22pc), mutton (0.72pc), pulse masoor (0.60pc) and beef (0.57pc).

In February, wholesale price index increased 0.90 percent while sensitive price index rose 2.21 percent year-on-year.

Annual inflation has so far been much above the government’s annual target of six percent as well as crossed the range of 6.5 to 7.5 percent given by the State Bank of Pakistan, which raised its key policy rate by cumulative 450 basis points to 10.25 percent since January last year.

Analysts said tendency of banks to park money into short-term papers indicated the persistent monetary tightening policies in times to come. Average inflation clocked in at 6.46 percent for the first eight months of the current fiscal year of 2018/19.

In July-February, prices of gas increased 53.32 percent, followed by kerosene oil (27.88pc), motor fuel (23.79pc), transport services (15.58pc), tomatoes (14.11pc), spices (12.89pc), motor vehicles (12.74pc), water supply (12.18pc), meat (12.17pc), education (11.65pc), construction input items (11.09pc), dry fruits (10.87pc), cosmetics (10.81pc), personal equipment (10.60pc), utensils (10.58pc), construction wage rates (9.66pc) and chicken (6.82pc).

Items that saw decrease in their prices during the July-February included onions (28.09pc), potatoes (18.24pc), pulse mash (14.32pc), gram whole (6.84pc), pulse masoor (4.98pc), fresh vegetables (4.08pc), besan (3.41pc), pulse moong (1.13pc), pulse gram (0.68pc), eggs (0.46pc) and fresh fruits (0.16pc).

In February, core inflation (non-food and non-energy) was registered at 8.8 percent compared with 5.2 percent in the corresponding month a year earlier.