Inflation rate surges up to 9%

KARACHI: The Consumer Price Index (CPI) surged to 9.70 per cent in the month of June 2021, taking the average inflation to 8.90 per cent compared to 8.59% in June 2020 and 10.87% in May 2021, respectively.

According to the Federal Bureau of Statistics (FBS) data, monthly inflation decelerated due to a decline in food prices which helped bring CPI down by 0.24% during June 2021.

The year-on-year (YoY) uptick in CPI was led by transport (17.4% YoY), food (10.5% YoY), clothing and footwear (9.96% YoY), miscellaneous (10.9% YoY), housing (9.1% YoY), restaurants (8.8% YoY), household equipment (9.8% YoY), and alcoholic beverages & tobacco (5% YoY), the data said.

On monthly basis, CPI was down 0.24% during June 2021. Food inflation registered a 1.8% decrease on month-on-month (MoM) in June 2021. Perishable food index recorded a 2.3% MoM decrease with items such as chicken and fruits contributing the most to the monthly food inflation decline.

Moreover, the non-perishable food index too posted a decline during the month, down 1.7% MoM. On the other hand, the increase in prices of petroleum products kept the transport Index up 1.9% MoM.

The trend in core inflation showed moderation on a YoY and MoM basis from the previous month. The urban core inflation measured by non-food, non-energy (NFNE), during June increased by 6.7% YoY as compared to an increase of 6.8% in the previous month and 6.5% in June 202Rural inflation, on the other hand, increased by 7.3% YoY in June as compared to an increase of 7.6% in the previous month and 8.8% in June 2020. On the monthly basis, Urban and Rural NFNE increased by 0.3% and 0.4%, respectively.

With June’s CPI figure, headline inflation during FY20-21 averaged at 8.9% YoY compared to 10.77% YoY in the corresponding period last year.

This monthly single-digit CPI is expected to continue in the next month too due to the high base effect. The analysts claimed further rise in the international oil prices, adjustments in utility tariff and an uptick in food inflation are the key concerns to our overall inflation expectation.

For now, the analysts expect 2021-22 inflation to remain within the range of 7-8%.
On the monetary policy front, the State Bank of Pakistan (SBP) decided to keep the benchmark policy rate unchanged at 7% in its latest May’s Monetary Policy meeting.


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