September inflation eases to 23.18pc amid question mark over data

ISLAMABAD: Pakistan’s headline consumer price index (CPI) inflation in September 2022 was recorded at 23.18 per cent, declining from a 47-year high reading of 27.3 per cent in the previous month. The government claims that the decline came mainly due to a cut in electricity tariff by 65 per cent, while house rent and other utility charges also reduced.

Interestingly, the government had taken those electricity consumers into its calculation who are consuming less than only 50 units (lifeline consumers), and the Pakistan Bureau of Statistics (PBS) quoted the electricity price at Rs6.43/unit in September against Rs9.38/unit in the previous month and Rs6.2/unit in Sept 2021. Hardly, there would be any household that consumes less than 50 units a month in the country, based on which the PBS gauges the entire country’s electricity costs. It has entirely ignored the recently announced Rs7.91/unit increase in base tariff and every month’s multi-billion rupees positive fuel charges adjustments (FCAs). According to the government’s policy, the 50-unit consumers are already insulated from these increases.

It may be noted that last month, the government also ended electricity slab benefits to consumers from Aug 1, 2022, which raised the utility bills much higher. This expelled around 8 million consumers from the subsidy net and their power charges increased substantially. Under the CPI basket, every head’s price and cost increased, but the index was strangely reduced.

Food inflation with over one-third weightage in the CPI basket shot up by 5.8 per cent over the previous month (29.5 per cent) to 31.7 per cent in September, and so the other heads of the CPI, whose costs visibly increased over the previous month’s prices. While having a cursory look at the data, the government has strangely claimed that house rent, water, electricity, gas, and fuel inflation has sharply declined by 17.66 per cent to 3.37 per cent against the previous month’s reading of 27.57 per cent. Since an average household spends nearly a fourth of their incomes on rent and utilities and it is the second major contributor to the CPI, so due to the decline, the general CPI was shown as reduced.

Transportation charges increased by 64.5 per cent in September against 63 per cent in the previous month, food and non-alcoholic beverages by 31.7 per cent against 29.5 per cent in Aug 2022, restaurants and hotelling 28.8 per cent (27.4pc in Aug 2022), and alcoholic beverages and tobacco became costlier by 32.67 per cent in September against 25.78 per cent in the previous month. Similarly, furnishing and household equipment maintenance charges went up 25 per cent against 21.86 per cent last month, and recreation and culture 22.76 per cent against 21.78 per cent in Aug 2022. Clothing and footwear costs also increased by 17.7 per cent (17.6 per cent), health charges by 13.77 per cent (11.9 per cent), and education charges almost stagnant at 10 per cent like the previous month.

The PBS also understated the prices of wheat-flour and other edible products compared to market prices. Wheat flour is a staple food. It is being sold in the open market of Islamabad/Rawalpindi at Rs2,150 to Rs2,250 per 20 kg bag (108 to 113/kg) while the PBS reported it at Rs1,095/bag (Rs64.75/kg) for Islamabad, Rawalpindi, Gujranwala, Sialkot, Lahore, Faisalabad, Sargodha, Multan, and Bahawalpur.

It indicates that the government is underreporting it by 96 per cent (or over 1,055 rupees). In the open market, there is no such place where flour could be available at the government’s reported price. This low reporting is despite the fact that the Punjab Atta Chakki owners are increasing the price of flour to Rs116 per kilogram, jacking its price up by Rs8/kg. The PBS reports wheat flour at Rs 2,100/20kg bag, Hyderabad Rs2,098, Sukkur Rs1,894, Larkana Rs1,972, Peshawar Rs1,247 and Quetta Rs2,238.

When this scribe contacted the official spokesman of the Pakistan Bureau of Statistics, Attiqur Rehman, he said: “It should not be like that, however, we collect data every Thursday from fixed retailers and fixed products, we cannot change it. We have also special numerators for collection of data.”

On asking why the prices are being understated, whether this is for showing inflation figure low, he replied: “Why would our numerators quote the wrong figures? We have no such intention.”

According to the PBS, the core inflation (excluding the food and energy components) increased that could be a challenge for the SBP to maintain the existing discount rate. Since July 2021, the bank has more than doubled its discount rate from 7 per cent in July 2021 to 15 per cent now, though the core inflation was not so high. Independent economists believe that since this inflation is cost-push instead of demand-pull, it will not serve the purpose but hit the country’s GDP growth.

The urban core CPI increased by 14.4 per cent YoY in Sept 2022 against an increase of 13.8 per cent in the previous month and 6.4 per cent in Sept 2021. Likewise, the rural core CPI increased 17.6 per cent YoY in Sept 2022 compared to 16.5 per cent in the last month and 6.2 per cent in Sept 2021. On a month-on-month basis, CPI inflation decreased by 1.2 per cent in Sept 2022 as compared to an increase of 2.4 per cent in the previous month and an increase of 2.1 per cent in Sept 2021.

Urban inflation increased by21.2 per cent yearly in September 2022 compared to 26.2 per cent in August 2022 and 9.1 per cent in Sept 2021. The rural CPI also increased 26.1 per cent on a year-on-year basis in September 2022 compared to an increase of 28.8 per cent in the previous month and 8.8 per cent in Sept 2021. Over the last month, urban inflation decreased by 2.1 per cent while the rural CPI increased by 0.2 per cent.

In a month, tomato prices increased 33.9 per cent, vegetables 22.7 per cent, pulse Moong 19.5 per cent, potatoes 17.4 per cent, wheat 15.4 per cent, eggs 14 per cent, chicken 13 per cent, tea 11.6 per cent, Besan 10 per cent, cigarettes 8.2 per cent, pulse Gram 6.9 per cent, pulse Mash 6.25 per cent, beans 3.2 per cent and milk 3 per cent over the previous month. However, vegetable ghee prices are down 4.5 per cent, onions 4 per cent, pulse Masoor 3 per cent, cooking oil 2 per cent and sugar 1 per cent.

In the non-food group, in one month, washing soap/detergents/matchbox prices went up 8 per cent, Liquefied Hydrocarbons 6.3 per cent, stationery 6 per cent, motor vehicle accessories 5.2 per cent, plastic products 5.1 per cent, motor fuel 3.2 per cent, furniture & furnishing 2.22 per cent and construction input items 1.7 per cent. However, electricity charges decreased by 65.33 per cent and motor vehicles by 2.43 per cent over the previous month, the PBS said.

On a year-on-year basis, in September 2022, tomato prices increased 128 per cent, pulse Masoor 80 per cent, Gram whole 75 per cent, mustard oil 72 per cent, vegetables 67 per cent, cooking oil 65 per cent, pulse Gram 64 per cent, Besan 58 per cent, vegetable ghee 57 percent, pulse mash 56 per cent, wheat 55 per cent, rice 40 per cent, pulse Moong 39 per cent, onions 38 per cent, potatoes 37 per cent, tea 36 per cent, cigarettes 35 per cent, eggs 35 per cent and milk 29 per cent over the same month last year. However, sugar prices were reduced 19 per cent and condiments & spices 14 per cent.

Among non-food items, motor fuel prices increased 87 per cent, liquefied hydrocarbons 53 per cent, stationery 52.42 per cent, cleaning & laundering 39 per cent, washing soap/detergents/matchbox 38 per cent, motor vehicle accessories 33 per cent, construction input items 29 per cent, cotton cloth 24 per cent and plastic products 21 per cent over a year ago. Electricity charges, however, reduced 30.5 per cent over last year, the statistical office said.

Wholesale Price Index (WPI) inflation in September 2022 increased to 38.9 per cent as compared to an increase of 41.2 per cent a month earlier and an increase of 19.6 per cent in Sept 2021. WPI inflation on MoM basis increased 1.4 per cent in Sep 2022 as compared to an increase of 3.1 per cent a month earlier and an increase of 3.2 per cent in the corresponding month, i.e. Sep 2021.

Since Pakistan is in a programme with the IMF, so the data the government releases is being monitored by the Fund. It is to be noted that once the Fund had fined Pakistan for submitting fudged data.