Inflation dips slightly month-on-month

Annual inflation rate measured by CPI comes in at 4.8% in April

ISLAMABAD: The average prices of goods and services remained largely stable last month, as the inflation index remained below 5% in April due to overall stability in prices of food and non-food items, the Pakistan Bureau of Statistics (PBS) reported on Tuesday.

The annual inflation rate measured by the Consumer Price Index (CPI) - which captures prices of 481 commodities in urban centres - clocked in at 4.8% in April compared with the same month of the previous year, reported the PBS. It was slightly lower than the level recorded in March.



The trend shows that the overall average inflation rate would remain below 5%, which is lower than the official target of 6% for fiscal year 2016-17. The average inflation during the first ten months of this fiscal year (July-April) remained at 4.1%, according to the PBS.

For fiscal year 2016-17, the government has set the inflation target at 6% while the International Monetary Fund and State Bank of Pakistan projections are below the targeted level. The government is expected to announce July-April provisional inflation rate in the Economic Survey of Pakistan for this fiscal year, which it will unveil in the last week this month.

The overall prices of perishable food items increased only 2.3% in April on an annualised basis. Compared to this, the non-perishable food items’ rates surged about 4%. The PBS reported that prices of fresh vegetables, fresh fruits, chicken, potatoes and rice increased in the range of 2.5% to 20.6% in April.

On an annual basis, the prices of potatoes, tomatoes, gram whole, fresh vegetables, eggs rice and tea surged in the range of 55% to 11%.

Interest rate

The State Bank of Pakistan has so far resisted the temptation to increase the interest rate, which remains close to historic low levels. In its last monetary policy announcement, the central bank again kept the key policy rate unchanged at 5.75%. Analysts have hoped that the SBP’s decision to keep the key policy rate unchanged would ensure price stability in the market.



Core inflation-measured by excluding energy and food items, slightly accelerated to 5.5% last month, showed the PBS data.

On an annual basis, the average prices of drugs and medicines increased 21.3%. Cost of attaining education increased over 11%, medical equipment’s over 10%, doctors clinical fees 8.8%, house rent 6.6% and woolen cloth by about 6%.

Published in The Express Tribune, May 3^rd, 2017.

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