Pakistan inflation at lowest level in two years

lowest Pakistan inflation

According to the report released by IM Securities, inflation in Pakistan was recorded at 5.7% in January, which is the lowest in two years. It was 14.6% in January 2020 and 8% in December 2020.

The urban consumer price index (CPI) or inflation fell to 5.0% in January from 7% in December. The rural inflation dropped to 6.6% in January from 9.5% in December.

The IM Securities research report says, “Urban and rural food inflation of 7.3% and 7.2% in January respectively, is at the lowest level they have been since July 2019.”

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It adds, “This was possible because the government addressed recent supply issues in wheat and sugar through imports and major perishable items are down 20% year on year.”

The report also said that this can be considered as a short-term effect because prices have been stabilized due to imports.

Meanwhile, food items are still exhibiting double-digit year-on-year growth rates. The research house is of view that food inflation can rebound in the coming months.

The report further says, “The deceleration in CPI (inflation) is largely due to a low-base effect of January 2020 (CPI of 14.6%) and receding food inflation, which has decreased to 2.2% month on month.”

It also says that “core inflation, however, exhibited greater stability. Urban core inflation is 5.4% in January against 5.6% in December. Rural core inflation, on the other hand, rose to 7.8% against 7.7% in the previous month.”

“It is noteworthy that core inflation has remained steady around since July 2020, despite 7% year on year increase in large scale manufacturing during July-November period,” the report read further.

“There are no signs of the economy overheating, as stated by the State Bank in the recent monetary policy [announcement].”

The food items, whose prices increased in urban areas during the month, were sugar (14.76%), mustard oil (10.18%), wheat (8.17%), vegetable ghee (6.06%), fruits (5.39%), cooking oil (3.28%), milk fresh (2.46%), pulse moong (2.02%) and fish (1.64%).

Moreover, food items, whose prices decreased, included potatoes (33.57%), tomatoes (30.03%), chicken (28.48%), onions (24.87%), eggs (15.39%), vegetables (10.14%) and condiments and spices (7.54%).

In rural areas, the price of sugar rose 14.26%, mustard oil 7%, cooking oil 6.22%, wheat 5.88%, vegetable ghee 5.62%, wheat flour 4.21%, fruit 3.75%, butter 2.93%, pulse moong 2.74%, grain whole 2.31% and pulse mash 1.85%.

The price of potato decreased 36.1%, tomatoes 32.77%, chicken 26.47%, onions 25.99%, vegetables 13.32%, eggs 9.27%, condiments and spices 7.96% and pulse masoor 0.42%.

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