Inflation jumps to 9.04% in September

Food prices surge as govt struggles to ensure smooth supplies

ISLAMABAD:

The inflation rate again jumped above 9% in September due to a double-digit spike in prices of food items as the government struggled to ensure smooth supplies.

Measured by the Consumer Price Index (CPI), the average rate of increase in prices of goods and services stood at 9.04% in September over the same month a year ago, reported the Pakistan Bureau of Statistics (PBS) on Friday night.

On a month-on-month basis, the index jumped 1.5% in September over August, according to the PBS.

The national data collecting agency has reported the latest inflation figures days after the Monetary Policy Committee (MPC) kept the policy rate unchanged at 7%. The inflation rate is driven by an increase in prices of both perishable and non-perishable food items.

The Economic Coordination Committee (ECC) of the cabinet on Wednesday decided to increase electricity and gas prices which, if endorsed by the federal cabinet, would keep inflation high.

The 9% inflation in September was in line with the federal government's expectations that had predicted that inflation would remain in the range of 7.8% to 9% in September. In August, the reading was 8.2%.

However, the inflation was higher than market expectations.

Core inflation, measured by excluding food and energy goods from the commodities' basket, slightly decelerated to 5.5% in September over August reading of 5.6% in urban areas, according to the PBS. In rural areas, the core inflation increased from 7.6% to 7.8% in September.

Food inflation in urban areas jumped from 11.3% to 12.4% in September on a year-on-year basis. In rural areas, it increased from 13.5% to 15.8%, reported the data collecting agency.

The average increase in prices of perishable food items group was calculated at 15.1% last month over a year ago, according to the PBS.

Prices of food and non-alcoholic group increased 14.7% from a year ago. Non-perishable food group prices also rose about 14.7%, according to the PBS.

The real challenge to the Pakistan Tehreek-e-Insaf (PTI)-led federal and provincial governments was to check prices of staple food and sugar.

Despite Prime Minister Imran Khan's interest in controlling prices of wheat, wheat flour and sugar, the rates have been increasing constantly.

The federal government's decision to import and export wheat and sugar has a direct bearing on prices in the domestic market. The government has failed to ensure availability of sugar and wheat at affordable prices, particularly for the low-income groups.

PBS reported that wheat prices increased 42.1% in September from the same month a year ago in urban areas and over 45% in rural areas. Prices of wheat flour rose 20.2% in cities and nearly 27% in rural areas.

After exporting wheat, the PTI government is now in the process of importing 1.5 million tons of wheat. The ECC on Friday approved the import of 180,000 tons of wheat from Russia at a cost of $279 per ton.

Sugar prices increased 25.4% in September in both cities and villages over a year ago, according to the national data collecting agency.

All this is happening at a time when the prime minister is taking personal interest in controlling prices of wheat and sugar.

Average inflation rate in first three months of the current fiscal year (July-September) stood at 8.9%, according to the PBS.

The central bank expects the average inflation to stay in the range of 8-9%% in the current fiscal year, which is higher than the 6.5% target set by the federal government for 2020-21.

On a year-on-year basis, potato prices rose 67.2%, tomatoes 51.9%, spices 40.9%, beans 40.3%, pulse moong 39.3%, eggs 38.6%, pulse mash 34.5%, butter 23.4%, vegetables 14%, woollen cloth 13.9%, fresh milk 13%, meat 12%, electricity charges 11.8%, cooking oil 11.1%, dry fruits 11%, construction wages 6.9%, stationery 4.6%, transport services 5% and house rent 4.3%.

Published in The Express Tribune, October 3^rd, 2020.

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