September inflation edges up to 9pc

ISLAMABAD: The month of September saw a new round of increased prices of consumer items as inflation edged up to 9 percent from 8.4 percent in August, data released by the Pakistan Bureau of Statistics (PBS) showed on Friday

Inflation rose by 2.1 percent month over month, due to substantial increases in three indices: food, housing, and construction. Sana Tawfiq, an analyst with Arif Habib Limited, told Geo.tv that the inflation rate was much higher than market expectations.

“Three sectors — food, transportation, and housing — accounted for a substantial rise of 2.1 percent month over month," she added. The rise in perishable food costs, increasing oil prices both globally and locally, and the rise in power rates in Pakistan have all affected the three sectors, according to Tawfiq. As a result, the inflation rate increased substantially as a result of this effect.

After the Monetary Policy Committee (MPC) meeting, which announced a 25 basis point increase in the policy rate for the next two months, the national data collecting agency released the latest inflation statistics.

The Wholesale Price Index (WPI), which measures wholesale market prices, increased by 19.6 percent in September, compared to 4.3 percent the previous month.

The government has set an average inflation goal of 8.5 percent for the current fiscal year, implying that year-on-year inflation would likely stay in double digits in fiscal year 2021-22.

According to Tawfiq, based on current economic data, inflation is projected to stay elevated until the end of the year. According to the PBS, both urban and rural regions saw a rise in total inflation. In September, urban inflation increased by 9.1%, while rural inflation increased by 8.8% compared to the same month previous year. In September of last year, inflation in urban areas was 7.7%, while inflation in rural regions was 8.4%.

Food inflation in villages and towns stayed steady at 9.1%, but it increased to 10.8% in cities, a considerable increase over the previous month. In September 2020, non-food inflation was 8.1 percent in urban areas and 8.5 percent in rural regions, respectively, compared to 5% and 7.2 percent in September 2020.

In September, core inflation, which excludes food and energy, increased to 6.4 percent in urban areas, according to the national statistics collection agency.

In September, the food category experienced a price rise of 10.21% over the same month a year earlier. Prices of non-perishable food products increased by 13.84 percent on an annualised basis within the food category, while prices of perishable goods decreased by 8.3 percent. Housing, water, electricity, gas, and fuel inflation increased to 9.74 percent last month, accounting for one-fourth of the basket's weight.

In September, the average price of clothes and footwear rose by 9.19 percent. Transportation costs have increased by 9.11 percent.

According to the PBS, the price of chicken increased 42.04 percent month over month, followed by a 15.7 percent rise in pulse masoor, 14.43 percent increase in eggs, and almost 10% increase in wheat. Last month, the costs of vegetables, cooking oil, and sugar rose by 3.95 percent, 3.64 percent, and 3.04 percent, respectively.

During the same time period, power rates increased by 11.4 percent. “Going ahead, if the government keeps food inflation under control, total CPI inflation will remain within the central bank's target range,” the analyst said, adding that if food inflation rises, overall inflation would rise by double digits.

September inflation edges up to 9pc

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