ISLAMABAD: The rise in consumer prices continued in November as inflation rose to 11.5 per cent from 9.2 per cent, the highest increase in the past 20 months, hit by a record rise in fuel prices last month, Pakistan Bureau of Statistics (PBS) data on Tuesday Shown.
The massive rupee depreciation fueled import-based inflation. Inflation as measured by the Consumer Price Index (CPI) rose to its highest level in 20 months – a period when global oil prices continued to rise, undercutting earlier gains.
At the same time, the prices of fresh vegetables, fruits and meat have also registered a steady increase in major urban and rural centres.
Average inflation during the July-November period rose to 9.32 per cent on a year-on-year basis.
Inflation had started to decline after rising to 12.4 per cent in February 2020 mainly due to fall in prices of agricultural products. The trend is now reversing due to increase in the prices of petroleum products.
In 2020-21, annual CPI inflation was recorded at 8.90pc against 10.74pc in the previous year.
The Finance Ministry’s Monthly Outlook Report shows that Pakistan’s inflation rate is driven by demand factors, international commodity prices, exchange rates, seasonal factors and the expectations of economic agents related to the future development of these indicators.
There has been a marginal increase in year-on-year (YoY) inflation in the last two months. Going forward, this increase in inflation could be offset by a seasonal profile whose contribution was positive in October but remains generally neutral in November.
Apart from government policy, administrative and relief measures can help in easing inflationary pressures.
However, crude oil prices along with all other energy inputs are rising due to increased global demand in the post-COVID scenarios. In addition, an increase in freight charges has made international trade costly and caused an increase in global inflation. International crude oil prices rose 106.7 percent year-on-year.
Currently, the government aims to increase agricultural productivity for food security and self-reliance to counter food inflation by offering agri-credit.
While the Finance Department in its recent report has claimed that taking into account the new price impulses and the low base effect in November, inflation will remain in the range of 8.5 and 9.5 per cent, but the November inflation has already crossed the projected figure.
Food inflation is still high as urban areas grew at 11.9 per cent year-on-year and 3.9 per cent on a monthly basis in November, while the corresponding increase in prices in rural areas was 8.6 per cent and 3.3 per cent.
According to a report by the Finance Department, food prices have increased globally due to short supply of commodities and high demand. Pakistan has also been affected as the country is a net importer of food items especially wheat, sugar, pulses and edible oil.
The government has announced a Rs 120 billion package, jointly funded by federal and provincial governments, to provide 30 percent rebate on ghee, flour and pulses to 130 million less privileged people, the report said.
PBS data showed that in urban areas, food items, whose prices saw an increase in November compared to the previous month, included tomato 131.64 pc, mustard oil 11.6 pc, vegetable ghee 10.87 pc, vegetables 10.47 pc, eggs Includes 10.19 pcs. , cooking oil 9.71pc, potato 8.85pc, honey 5.61pc, fruit 4.37pc, lentil lentil 3.14pc, meat 2.63pc, milk 2.33pc, fish 1.90pc, gram 1.77pc, rice 1.73pc and sugar 1.43pc.
Onion prices declined by 7.97 per cent in urban areas, 4.34 per cent in chicken and 0.69 per cent in lentils.
Overall, a similar trend was observed in food prices in rural areas.
Non-food inflation in urban centers increased by 12 percent year-on-year and 2 percent on a monthly basis, while in rural areas it rose to 13 percent and 3 percent, respectively. The increase in non-food inflation was mainly driven by a sharp rise in oil prices in November.
Core inflation in urban areas stood at 7.6 per cent in November, compared to 6.7 per cent in the previous month. In rural areas, the corresponding increase was 8.2 per cent against 6.7 per cent.
State Bank fixes the key policy rate – currently 8.75 pc – based on the core inflation rate.
Average inflation, as measured by the Sensitive Price Index, rose to 18.1 per cent in November from 15.2 per cent a month ago, while the wholesale price index rose to 27 per cent from 21.2 per cent during the month under review.
Published in Dawn, December 1, 2021