Inflation edges up to 9.1pc in March

Inflation edges up to 9.1pc in March

The month of March saw a new round of increased prices of consumer items as inflation edged up to 9.1 per cent from 8.7pc in February, showed data released by the Pakistan Bureau of Statistics (PBS) on Thursday.

On a month-on-month basis, inflation increased by 0.36pc mainly due to an increase in prices of cooking oil, sugar, wheat, pulses, petroleum products and electricity charges for the end consumers. At the same time, non-food inflation has steadily been on the rise for the past few months due to higher energy prices.

With shortages in domestic production, inflation at the beginning of the current fiscal year stood at 9.3pc in July, easing down to 8.2pc in August before rebounding to 9pc in September. From September, inflation went on a downward trajectory, giving some relief to the end consumers. However, it rebounded in February. A few consumer items as well as energy prices pushed up inflation in March again. As a result, food inflation enters double digits in both urban and rural areas. There are food items prices of which are still on an upward trajectory. The average CPI (Consumer Price Index) in nine months — between July and March — eased from 11.53pc last year to 8.34pc this year.

Higher food prices pull up inflation as prices of food group rose 11.5pc year-on-year and 1.7pc month-on-month in March in urban areas. The situation is almost the same in rural areas where prices of food group rose 11.1pc YoY and 1.5pc MoM in March.

The government has imported wheat and sugar to bridge shortfalls and improve supplies in the market. With the arrival of potatoes and onions in the domestic market, their prices posted a decline during the past month under review.

In urban areas, food items that saw a jump in prices in March from the previous month included eggs 12.96pc, fruits 10pc, potatoes 9.54pc, chicken 6.58pc, sugar 4.82pc, tomatoes 4.67pc, pulse mash 4.57pc, pulse gram 4.39pc, rice 1.61pc and wheat flour 1.46pc.

The items whose prices declined in urban areas were onions 2.37pc, dried fruits 2.19pc, fish 1.78pc and vegetables 1.48pc.

In rural areas, egg prices were higher by 15pc, chicken 12.21pc, potatoes 11.43pc, fruits 6.08pc, sugar 5.77pc, besan 4.71pc, pulse gram 3.89pc, gram whole 2.53pc, pulse mash 2.52pc, pulse masoor 2.18pc, vegetable ghee 1.58pc, cooking oil 1.53pc and wheat flour by 0.97pc.

However, the prices of tomatoes decreased by 6.10pc, fish 1.14pc, condiments & spices 0.61pc and wheat 0.33pc.

Non-food inflation in urban centres was recorded at 7.1pc YoY and a decline of 0.6pc MoM, whereas in rural areas it rose by 8.1pc and a decline of 0.4pc, respectively. The decline in non-food inflation MoM will show a further decline in the coming months.

The urban CPI covers 35 cities and 356 items, while the rural one tracks 27 centres and 244 products. The former grew by 8.7pc YoY in March whereas the latter jumped by 9.5pc.

Core inflation in urban areas was recorded at 6.3pc in March, compared to 6.4pc in the previous month. In rural areas, it fell to 7.3pc in March from 7.7pc in the previous month.

The State Bank of Pakistan determines the key policy rate, currently at 7pc, based on the core inflation rate. The central bank has reduced the rate by a cumulative 625 basis points since March 17 to combat uncertainty amid the coronavirus pandemic.

Average inflation measured by the Sensitive Price Index surged to 18.7pc in March from 11.9pc during the previous month. On MoM basis, it increased by 5.7pc in March.

The Wholesale Price Index was slightly up from the previous month’s 9.5pc to 14.6pc in March. WPI inflation MoM increased by 3.7pc in March.