Inflation hits highest level in 16 months

Published: November 2, 2013
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8.4% is the average inflation in July to October of the current fiscal year compared to the annual target of 8%. DESIGN: ASAD SALEEM

8.4% is the average inflation in July to October of the current fiscal year compared to the annual target of 8%. DESIGN: ASAD SALEEM

ISLAMABAD: Inflation in the country increased at a faster pace in October and touched 9.1% –the highest rate in 16 months – despite the statistical organisation showing half the actual increase in prices of electricity.

The Pakistan Bureau of Statistics – which determines the increase and decrease in prices of a basket of 487 goods and services – reported on Friday that the Consumer Price Index (CPI) rose 9.1% in October over the same month of previous year. In September this year, inflation stood at 7.4%.

It was the biggest rise in inflation in months, underlining the inflationary pressures due to constant increase in prices of utility services and other essential goods.

According to the PBS, electricity prices for domestic consumers rose 15.82% in October, far lower than the average increase of about 30% the PML-N government announced to recover the cost of electricity and meet a condition of the IMF loan programme.

Explaining the bureau’s move, a PBS official told The Express Tribune that 15.82% was the average increase in electricity prices for the entire country that also covered consumers of 1 to 200 units and the Karachi Electric Supply Company, who were exempted by the government. Owing to the rigid methodology, he said, the PBS came up with the figure by taking into account all consumers in the country.

However, the Ministry of Finance has its own version. Electricity distribution companies have not yet issued bills for October, then how can the PBS consider the impact in monthly inflation figures, asked finance ministry spokesman Rana Assad Amin.

Similarly, prices of high speed diesel and petrol were also calculated as an average and put under the category of motor fuel, showing only a 2.6% increase. In October, the government had increased diesel price by 4.3% and petrol price by 3.8%.

Many users of PBS data always question the authenticity of inflation figures. The previous government had decided to undertake reforms in the organisation, but did not give it full autonomy. Those sitting at the helm of affairs in the PBS are retired bureaucrats, who are vulnerable to political pressure.

In October, the commodity group covering prices of housing, water, electricity, gas and fuels recorded an increase of 9.5% over the same period last year, according to the PBS. The group’s weight in the CPI basket is about 29.4%.

Prices of perishable food items rose 18.6% while the clothing and footwear group increased 14.6%.

For the current fiscal year 2013-14, the government has set the inflation target at 8%. But independent economists suggest that administrative and monetary measures will take inflation to 12%.

Average inflation in the first four months (July-October) of the current fiscal year stood at 8.4%. Month-on-month inflation soared 2% in October compared to September, which the experts described as alarming.

Despite a significant increase in the general inflation rate, non-fuel and non-food inflation – called core inflation – decelerated to 8.4% in October over 8.7% in September. Core inflation is taken as an indicator that is shielded from seasonal price shocks due to exclusion of volatile food and energy prices.

Published in The Express Tribune, November 2nd, 2013.

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Reader Comments (5)

  • Parvez Amin
    Nov 2, 2013 - 7:37AM

    In simple words, inflation follows the theft of money from citizens. The theft is cleverly disguised. Actual money is not stolen. Its value is reduced. The beneficiary is the administration. They continue to enjoy their obscenely extravagant life style – at public expense. The government is very good at hiding its misconduct behind fancy word and official reports. But a theft is a theft.

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  • Asharaf
    Nov 2, 2013 - 7:47AM

    We are paying the price by supporting anti Musharraf forces. Musharraf era has been the best in Pakistan regarding economic prosperity and PAK defense.

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  • Average N Leaguer
    Nov 2, 2013 - 8:29AM

    Change in 90 days hahahahaha Imran Khan can’t do anything right, Oh wait he isn’t in the federal government or the PM, never mind lets still blame him his supporters won’t turn the financial capital into a war zone or his party members riot in the National Assembly.

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  • Last Word
    Nov 2, 2013 - 10:21AM

    Print more money, and it would double in next six months.

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  • Sajjad
    Nov 2, 2013 - 2:55PM

    Its all because of printing billions of paper rupees in the market.

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