Inflation drops to 30-month low of 11.8 percent in May

Inflation declined due to improvement in supply of commodities and reduction in oil prices

ISLAMABAD   -   Inflation has touched a 30-month low of 11.8 percent in May following improvement in supply of commodities and reduction in oil prices.

Inflation is continuously on the declining side for the last several months. Inflation measured through consumer price indicator (CPI) was recorded at 28.3 in January this year, which eased to 23.1 percent in February and 20.7 percent in March. Later, the monthly inflation has reduced to 17.3 percent in April and now it has touched 30-month low of 11.8 percent in May, according to the latest data of Pakistan Bureau of Statistics (PBS).

Inflation has remained at a lower side than the estimates of the government. The ministry of finance had projected that inflation is anticipated to remain within the range of 13.5-14.5 percent for May 2024. “The inflation outlook for May 2024 continues on a downward trajectory, attributed to elevated inflation levels previous year and improvements in the domestic supply chain of perishable items, staple food like wheat and reduction in transportation costs,” the ministry noted in its monthly report.

The government’s commitment to curbing inflation through stringent administrative measures paints a promising picture for the inflation outlook. A key pillar in this strategy is the bolstered availability of food items, which is crucial for taming inflationary pressures. By consistently managing supply and demand, the government stabilizes prices and reduces market volatility. In May 2024, petroleum product prices dropped twice, positively impacting the CPI for the month. Lower fuel prices reduced transportation costs, contributing to this favorable CPI trend. The SPI has recorded a decline for the fourth consecutive week which augurs well for CPI outlook.

According to the latest data of PBS, the inflation on a monthly basis has decreased by 3.2 percent in May 2024 as compared to a decrease of 0.4 in the previous month and an increase of 1.6% in May 2023. The CPI inflation (urban) increased by 14.3 percent on a year-on-year basis in May 2024. Meanwhile the CPI inflation (rural) has enhanced by 8.2 percent. The CPI inflation has increased by 24.52 percent in ten months of the current fiscal year. The Sensitive Price Index (SPI), which gauges rates of kitchen items on a weekly basis, increased by 28.65 percent. Wholesale Price Index (WPI) inflation has increased by 21.12 percent in July to May 2023.

The federal government for the current fiscal year 2023-24 had set an inflation target at 21.5 percent.

The break-up of inflation of 11.76 percent showed that food and non-alcoholic beverages prices decreased by 0.17 percent last month. Similarly, health and education charges went up by 19.42 percent and 15.95 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 33 percent in the last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 2.88 percent. Prices of clothing and footwear increased by 17.99 percent and furnishing and household equipment maintenance charges 13.75 percent. Recreational charges and those related to culture went up by 7.96 percent in the period under review, while amounts charged by restaurants and hotels by 13.7 percent in May 2024 as compared to the same month last year.

In rural areas, the food items which saw their prices increased included potatoes (22.49 percent), meat (2.18 percent), milk powder (1.52 percent), beverages (1.37 percent), pulse gram (1.08 percent), milk fresh (0.90 percent), gur (0.88 percent), milk products (0.79 percent), beans (0.77 percent), pulse moong (0.77 percent), sugar (0.72 percent), vegetable ghee (0.48 percent).

In rural areas, prices of the following items reduced: tomatoes (57.91 percent), onions (47.97 percent), chicken (37.57 percent), wheat flour (18.80 percent), wheat (18.14 percent), fresh vegetables (17.96 percent), fresh fruits (11.66 percent), wheat products (3.87 percent), besan (2.71 percent), pulse masoor (2.30 percent), rice (1.72 percent) and eggs (1.25 percent). In non-food commodities, prices of following commodities decreased liquified hydrocarbons (7.84 percent), electricity charges (4.50 percent), motor fuels (3.41 percent), transport services (1.88 percent), construction input items (1.32 percent) and communication apparatus (0.30 percent).

In urban areas, prices of following commodities increased: potatoes (14.73 percent), meat (4.06 percent), beans (3.91 percent), eggs (1.60 percent), vegetable ghee (1.27 percent), cooking oil (1.26 percent), pulse mash (1.06 percent), gram whole (0.63 percent), milk fresh (0.60 percent), sugar (0.59 percent), pulse gram (0.51 percent), sweetmeat (0.50 percent), milk powder (0.47 percent)and honey (0.38 percent).

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