Inflationary pressures increasing due to imports

ISLAMABAD: Pakistan’s inflationary pressures have been increasing in recent months mainly because of imports of essential food products, petroleum group, textiles and other raw materials.

The prices of petroleum crude have gone up from $35.6 per barrel in October 2020 to $47 per barrel in January 2021 so its prices surged by 31.9 percent just in three months period.

Now Goldman Sachs is even more bullish on oil, expecting Brent Crude prices to hit $75 a barrel in the third quarter this year, on the back of faster market rebalancing and lower expected inventories.

In the wake of expected rising prices of oil in the international market, the domestic prices are bound to go up in months ahead so the CPI based inflation is also expected to increase. This rising inflation through imported items is going to lead the Consumer Price Index (CPI) substantially for the ongoing month (February 2021) ranging to 7.5 to 8 percent against 5.7 percent for January 2021. The analysis done by official circles revealed that the imported items are fueling inflationary pressures manifold as the Sensitive Price Index (SPI) had already witnessed unprecedented spike in prices of essential food items.

In the food group, the palm oil prices in US dollar terms have gone up from 706.9 per ton in October 2020 to 848.4 per ton in January 2021 so it witnessed a 20 percent surge in prices. Now the prices of palm oil have further gone up to $950 per ton so the overall price increase surged by 30 percent. It has resulted in increasing oil/cooking oil prices in the domestic market manifold in recent months for different brands.

The prices of Soyabean oil have increased from $708.9 per ton in October 2020 to $1,200 per ton in January 2021 per ton so it went up by 69.3 percent. It is being used in feed for chicken so the domestic prices of feed increased from Rs 2,000 to Rs 4,000 per bag in the domestic market. The prices of chicken in the domestic market are not coming down from Rs 220 per kg.

The refined sugar has gone up from $442.3 per ton in October 2020 to $689.8 per ton in January 2021 so the prices surged by 56 percent. It had resulted in increasing domestic prices and now crossed Rs 100 per kg mark in the domestic market.

The prices of pulses have been increased from $446.2 per ton in October 2020 to $588.7 per ton in January 2021 so the prices became dearer by 32 percent. The price of tea has gone up from $2.1 per ton to $2.2 per ton in the last three months and witnessed a surge by 6.6 percent.

The raw cotton (metric ton) has gone up from $1.6 per kg in October 2020 to $1.7 per kg in January 2021 so it witnessed an increase by 7.4 percent. The synthetic fiber has gone up from $1,106.1 per ton in October 2020 to $$1,391.3 per ton in January 2021 so witnessed surge by 25.8 percent.

The imported fertiliser prices have gone up by 32 percent in the last three months period. The plastic material witnessed 18 percent increase, iron steel and scrap 8.3 percent and iron and steel 5.7 percent in the last three months period.