ISLAMABAD-Inflation has gone beyond the projections of the government as it was recorded at 28.3 percent in the first month (July) of the current fiscal year.
Inflation measured through consumer price indicator (CPI) was recorded at 28.3 percent in July this year as against 29.4 percent in the preceding month (June). The ministry of finance had projected the inflation in the range of 25-27 percent for the month of July 2023. “Inflation in July 2023 is expected to ease out compared to in the month of June 2023,” the ministry had noted in its monthly report last week.
The State Bank of Pakistan (SBP) on Monday had maintained the status quo and decided to keep the key policy rate unchanged at 22 percent. The SBP expects the annual inflation to remain generally on a downward trajectory due to subdued domestic demand amid tight monetary policy stance, favorable outlook for global commodity prices, and positive base effect. This assessment takes into account the impact of recent measures (increase in electricity tariffs, changes in duties and taxes on consumer items and raw materials) and their second-round effects. Based on this assessment, the SBP projects average inflation in the range of 20 – 22 percent in FY24, down from 29.2 percent in FY23. The MPC’s assessment shows inflation to fall gradually during the first half of FY24, before falling below 20 percent in the second half.
The federal government for the current fiscal year 2023-24 had set an inflation target at 21.5 percent. However, the inflation might further increase in the months to come due to the hike in oil and electricity prices. The government on Tuesday enhanced the petrol price by Rs19.95 per liter to Rs272.95 per liter and diesel by Rs19.9 per liter to Rs273.4 per liter. Federal government had recently increased the power tariff by Rs 7.5/unit from July 1, 2023. According to the latest data of Pakistan Bureau of Statistics (PBS), the inflation on monthly basis has increased to 3.5 percent in July 2023 as compared to decrease of 0.3 percent in the previous month. The CPI inflation Urban increased by 26.3 percent on a year-on-year basis in July 2023. Meanwhile, the CPI inflation for Rural has enhanced by 31.3 percent. The Sensitive Price Index (SPI), which gauges rates of kitchen items on a weekly basis, increased by 29.32 percent. On a monthly basis, Wholesale Price Index (WPI) inflation on YoY basis increased by 27.07 percent in July 2023.
The break-up of inflation of 28.31 percent showed that food and non-alcoholic beverages prices increased by 39.54 percent last month. Similarly, health and education charges went up by 21.51 percent and 7.98 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 10.84 percent in the last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 102.11 percent. Prices of clothing and footwear increased by 20.36 percent and furnishing and household equipment maintenance charges 41.71 percent. Recreational charges and those related to culture went up by 65.87 percent in the period under review, while amounts charged by restaurants and hotels by 34.74 percent in July 2023 as compared to the same month last year.
In urban areas, the food items which saw their prices increased during July 2023 included fresh vegetables (37.64 percent), tomatoes (33.45 percent), condiments and spices (18.80 percent), wheat flour (13.36 percent), sugar (11.84 percent), wheat (11.14 percent), potatoes (8.16 percent), Gur (6.79 percent), milk powder (5.52 percent), beverages (4.01 percent), pulse mash (3.24 percent), butter (3.01 percent), milk products (2.95 percent) and rice (2.75 percent). In non-food commodities, prices of following commodities enhanced: electricity charges (39.88 percent), transport services (4.01 percent), hospitals services (3.60 percent), postal services (2.35 percent), cleaning and laundering (2.08 percent), dental services (1.79 percent) and house rent (1.37 percent).
In urban areas, prices of following items reduced: fresh fruits (17.90 percent), vegetable ghee (3.81 percent), mustard oil (2.82 percent), chicken (2.76 percent), pulse gram (2.58 percent), onions (2.21 percent) and pulse moong (1.88 percent). In rural areas, prices of following commodities increased: tomatoes (32.57 percent), fresh vegetables (26.22 percent), wheat flour (13.43 percent), sugar (12.45 percent), wheat (10.77 percent), potatoes (7.74 percent), Gur (4.69 percent), beverages (2.93 percent), milk fresh (2.17 percent), rice (1.38 percent), pulse mash (1.32 percent), beans (0.93 percent) and wheat products (0.92 percent). In non-food items, prices of following commodities enhanced including electricity charges (39.88 percent), washing soaps, detergents and match box (1.93 percent), dental services (1.87 percent), tailoring (1.77 percent), house rent (1.68 percent), plastic products (1.41 percent), hosiery (1.40 percent) and household equipments (1.35 percent).