Inflation witnesses slight reduction

ISLAMABAD:

Inflation is decreasing in Pakistan, albeit slightly, but the trend signifies that the measures taken by the government for this purpose might prove to be fruitful.

In the past week, a decrease of 0.19% was recorded, and the year-on-year increase dropped from 42.70% to 40.58%.

The Pakistan Bureau of Statistics (PBS) released the weekly inflation report, wherein it was mentioned that the prices of 30 essential commodities increased while the rates of 10 commodities decreased. The prices of 11 commodities remained stable.

According to the PBS, the price of potatoes decreased by 0.33%, onions by 16.24%, tomatoes by 9.84%, chicken meat by 1.88%, sugar by 0.95%, vegetable ghee by 0.39%, cooking oil by 0.10% and liquefied petroleum gas (LPG) by 2.62%.

It also stated that the price of tea increased by 6.30%, daal moong by 3.46%. eggs by 2.54%, daal channa by 2.53%, flour by 1.96%, rice by 1.73%, daal mash by 1.68% and bread by 1.45%.

The bureau further stated that the annual inflation rate was 33.03% for the group earning up to Rs17,732 per month and 38.29% for those making between Rs17,733 and Rs22,888 per month.

It added that the annual inflation rate was 37.74% for those earning between Rs22,889 and Rs29,517 per month, 38.10% for those making between Rs29,518 and Rs44,175 per month and 41.81% for those earning more than Rs44,176 per month.

The inflation rate last month had jumped to a 47-years-high level of 27.3% due to the government’s decision to increase prices of electricity and fuel, as it burdened consumers of the petrol even more than what is required under a deal with the International Monetary Fund (IMF).

It was the highest rate since the May of 1975 when the reading had been recorded at 27.8%.

Some of the increase of the administrative prices was justified because of the withdrawal of electricity and fuel subsidies.

However, in many cases the government was passing on the impact of inefficiency of the power sector and also recovering the prices of relief to one sector from another set of consumers.

Under a deal with the IMF, the government was required to increase the petroleum levy to Rs30 per litre on petrol by September 1 and Rs15 per litre on diesel in three phases.

However in August, it increased the levy to Rs37.50 per litre on petrol -- Rs7.5 per litre more than needed under the IMF deal -- to lower taxes on diesel.

The petroleum levy was slashed to Rs7.5 per unit, in violation of a commitment given to the IMF.

While justifying the increase, Finance Minister Miftah Ismail had said the diesel consumption was expected to increase due to pumping out the flood water and the government did not want to increase the levy at this stage. He had added that there would be no revenue loss, as the consumption of petrol was higher than diesel.