Economics

Inflation remains unchanged at 8.4%

Core inflation drops to 6.3% in urban areas in August — File

KARACHI: Consumer Price Index (CPI)-based inflation was recorded at 8.4% on a year-on-year basis in August 2021, compared to 8.41% in July 2021 and 8.21% in August 2020, according to the data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.

As per the monthly review of price indices, on a month-on-month basis, CPI increased by 0.6% in August 2021 compared to an increase of 1.3% in the previous month.

The year-on-year uptick in CPI inflation was led by transport, food, and housing.

“The inflation rate is in line with the market estimate,” Pak-Kuwait Investment Company Head of Research Samiullah Tariq told The News.com.

The average inflation rate during the first two months (July-August) stood at 8.38% as compared to 8.74% in the same period of the last fiscal year, according to the PBS.

During the month under review, the Wholesale Price Index (WPI), which captures prices in the wholesale market, also rose sharply by 17.7% in August over the same month a year ago.

The PBS reported that the overall inflation rate slowed down in the urban area, meanwhile the inflation in rural areas recorded an increase. The inflation rate in urban areas slowed down to 8.3% in August and in rural areas surged to 8.4% over the same month of the last year.

The food inflation rate in cities stood at 10.2% and in villages and towns at 9.1%, which was significantly higher than the previous month. Non-food inflation was recorded at 7.2% in urban areas and at 7.7% in rural areas.

Core inflation – calculated by excluding food and energy items – dropped to 6.3% in urban areas in August, reported the national data collecting agency.

The food group saw a price increase of 9.96% in August from the same month a year ago. Within the food group, prices of non-perishable food items dipped to 11.09% on an annualised basis but the prices of the perishable goods were effectively reduced by 3.38%. The inflation rate for the housing, water, electricity, gas and fuel group – having one-fourth weight in the basket – reduced to 7.96% last month.

Average prices for the clothing and footwear group reduced 9.34% in August. Prices related to transportation reduced 8.08%.

In August, tomatoes prices skyrocketed 36.34%, followed by a 23.68% surge in egg prices, 20.47% increase in prices of chicken, nearly 14% meat, according to the PBS. The milk prices increased 10.64% last month.

The majority of the prices increased due to changes in taxation policies in the budget, an increase in commodity prices in the international market and a fall in the value of the rupee.

Samiullah Tariq said: “Going forward, we believe inflation would remain in the range specified by the central bank.”

Source: The News

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