Weak rupee: Surging food prices fan March inflation

ISLAMABAD: Consumer Price Index (CPI) accelerated in March, stayed in the double digits for the fifth month in a row, due to higher commodity prices and analysts said inflation could stay uncomfortably high in 2022 on weak rupee.

CPI inflation increased 12.72 percent in March 2022 compared to 12.24 percent in February, and 9.1 percent in March 2021, Pakistan Bureau of Statistic (PBS) data showed on Friday. In February, the CPI was recorded at 12.24 percent, and in March 2021, it was at 9.1 percent.

Food and beverages have the most significant share of 34.58 percent, and utility charges (housing, water, electricity, and fuel) with 23.63 percent share. Both prices sharply increased during the month under review. Clothing and footwear and transportation charges also increased sharply.

CPI inflation has been on the rise for several months. Increased commodity prices, including food and crude oil in the international market impact, cannot be overruled. This is a type of imported inflation affecting millions of poor Pakistanis. In Pakistan’s imports bill, apart from energy imports, food items including wheat, pulses, sugar, edible oil, and others occupy a sizable share.

PBS further reported nine-month (July-March 2021-22) average inflation at 10.77 percent compared to 8.34 percent in the same period of last year. It falls within the range of the State Bank of Pakistan projection of CPI falling between 9 to 11 percent by the end of this fiscal.

According to PBS, urban inflation increased by 11.9 percent on a year-on-year basis in March 2022 compared to an increase of 11.5 percent in the previous month and 8.7 percent in March 2021.

Similarly, rural CPI increased by 13.9 percent on a YoY basis in March 2022 compared to 13.3 percent in the previous month and 9.5 percent in March 2021.

Urban core CPI (excluding the food and energy components) increased by 8.9 percent YoY in March 2022 against 7.8 percent in the previous month and 6.3 percent a year ago. Likewise, rural core-CPI increased 10.3 percent YoY in March 2022 compared to 9.4 percent in the last month and 7.3 percent in March 2021.

The wholesale price index (WPI) showed a 23.8 percent increase in March compared to 23.6 percent a month earlier and only 14.6 percent in March 2021. The Sensitive Price Indicator (SPI) also increased 13 percent in the month under review compared to 18.7 percent last month and 18.7 percent in March 2021.

According to the PBS, food and beverage prices increased 15.30 percent from 14.73 percent in the previous month. Utility charges (housing, water, electricity, and fuel) increased by 8.3 percent in March 2022.

Although having a low share in the CPI basket, transportation charges increased the highest with 26.25 percent, hoteling at 14.56 percent, furnishing and household equipment maintenance at 13.8 percent, clothing and footwear at 9.67 percent, and recreation and culture at 9.32 percent.

Health and education charges went up 10 percent and 8.26 percent, respectively. Similarly, communication charges increased 2.55 percent over the corresponding month of last year.

During one month, chicken price increased by 33.6 percent, fruits 15.17 percent, mustard oil 8.73 percent, vegetable ghee 8.32 percent, onions 7.01 percent, cooking oil 5.05 percent, gram whole 2.11 percent, tea 1.92 percent, milk 1.52 percent and besan 0.91 percent over the previous month. Price of liquefied hydrocarbons also climbed up 7.8 percent, woolen cloth 3.14 percent, furniture and furnishing 2.53 percent, construction input items two percent, and stationery 1.83 percent.

However, tomato prices declined by 36.53 percent, eggs 14.75 percent, wheat 4.89 percent, potatoes 3.68 percent, condiments and spices 2.38 percent, gur, wheat flour and sugar went down by one percent over the previous month.

However, on YoY basis, prices of tomatoes climbed up 149.64 percent, mustard oil 59.91 percent, vegetable ghee 49.56 percent, cooking oil 48.05 percent, pulse masoor 38.32 percent, vegetables 34.92 percent, fruits 32 percent, gram whole 25.37 percent, meat 23.68 percent, chicken 19.59 percent, and beans increased by 13.62 percent over the same month last year.

Besides, prices of liquefied hydrocarbons went up 78.88 percent, motor fuel 36.98 percent, cleaning and laundering 23.6 percent, washing soap/detergents/ match box 16.71 percent, motor vehicle accessories 15.63 percent, and solid fuel up 12.88 percent in one year.

Reduction was recorded in the prices of pulse moong 27.11 percent, eggs 20.32 percent, condiments and spices 15.41 percent, sugar 10.7 percent, and potatoes 9.49 percent.