ISLAMABAD-Inflation has eased to 23.2 percent in September this year mainly due to reduction in energy prices but prices of food items still remain on the higher side.

Inflation measured through Price Index (CPI) had broken all recent records in the last couple of months mainly due to the government’s economic policies, international higher prices and the recent floods. Inflation touched 47 years higher 27.3 percent in August. In July, annual CPI inflation was at 24.9 percent. However, in September, inflation has eased to 23.2 percent. On a month-on-month basis, it has decreased by 1.2 percent in September 2022, according to the latest data of Pakistan Bureau of Statistics (PBS).

The CPI inflation Urban increased by 21.2 percent on a year-on-year basis in September 2022. Meanwhile, CPI inflation Rural increased by 26.1 percent on a year-on-year basis in last month. The Sensitive Price Index (SPI), which gauges rates of kitchen items on a weekly basis, increased by 30.23 percent. On a monthly basis, Wholesale Price Index (WPI) inflation on YoY basis increased by 39.55 percent in September 2022.

One of the main reasons behind reduction in inflation was mainly due to the lower fuel charge adjustment due to revision in base tariff and government deferral of June FCA of Rs9.9 per unit. The government had deferred the FCA, which was very high for the previous month. Economic experts are of the view that inflation might further ease in the months to come mainly due to reduction in oil prices and currency appreciation. The federal government on Friday has announced to reduce petroleum products prices by up to Rs12.63 per liter. Meanwhile, the local currency is continuously appreciating from the last few days.

The ministry of finance had projected that September may show a halt to the recent drastic accelerations of the annual inflation rate. In its monthly report, the ministry noted that one reason is a steady decline in international food and oil prices during the last 2 months. On the other hand, since March, the Pakistani rupee is depreciating against the USD. One worrisome problem is the devastating effects of recent floods which have destroyed a substantial part of crops. However, their effects on inflation are being alleviated by prompt government measures to counter forms of price speculation and to provide sufficient supplies by allowing trade from neighboring countries. Still, the risk of second-round effects of recent inflationary shocks persists which may work themselves through the markets. It can also be observed that in recent years, the month of August shows a positive seasonality in the MoM inflation rate. 

The break-up of inflation of 23.2 percent showed that food and non-alcoholic beverages prices increased by 31.7 percent last month. Similarly, health and education charges went up by 13.77 percent and 9.97 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 3.37 percent in the last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 32.67 percent.

Prices of clothing and footwear increased by 17.7 percent and furnishing and household equipment maintenance charges 25.06 percent. Recreational charges and those related to culture went up by 22.76 percent in the period under review, while amounts charged by restaurants and hotels by 28.81 percent in September 2022 as compared to the same month last year.

In urban areas, the food items which saw their prices increased during September 2022 included tomatoes (33.86 percent), vegetables (22.70 percent), pulse moong (19.53 percent), potatoes (17.43 percent), wheat (15.35 percent), eggs (14.20 percent), chicken (13.05 percent), tea (11.59 percent), besan (9.74 percent), cigarettes (8.21 percent), pulse gram (6.90 percent), pulse mash (6.25 percent), beans (3.21 percent) and milk (2.96 percent).

In non-food commodities, prices of following commodities enhanced: washing soap/detergents/match box (8.30 percent), liquefied hydrocarbons (6.34 percent), stationery (6.01 percent), motor vehicle accessories (5.22 percent), plastic products (5.14 percent), motor fuel (3.19 percent), furniture & furnishing (2.22 percent) and construction input items (1.71 percent)

In urban areas, prices of following items were reduced: vegetable ghee (4.50 percent), onions (3.86 percent), pulse masoor (3.08 percent), cooking oil (1.89 percent) and sugar (0.93 percent). In non-food commodities, electricity charges had declined by (65.33 percent) and motor vehicles (2.43 percent).

In rural areas, prices of following commodities increased: tomatoes (72.34 percent , vegetables (26.31 percent), eggs (15.87 percent), pulse moong (14.47 percent), potatoes (12.67 percent), chicken (10.92 percent), wheat (9.66 percent), besan (7.86 percent), tea (7.52 percent), condiments & spices (6.60 percent), pulse mash (4.87 percent), cigarettes (4.82 percent) and milk (4.45 percent).