Inflation Rate Hits 5.2%, the Highest Ever in Over 3.5 Years

CPI Inflation rate reached the highest level of 5.21% in June mainly due to the unfavorable results of the increase in domestic petroleum prices and depreciation of the Rupee against the Dollar.

According to Pakistan Bureau of Statistics, CPI inflation General increased by 5.2% on year-on-year basis in June 2018 as compared to an increase of 4.2% in the previous month and 3.9% in June 2017. On month-on-month basis, it increased by 0.6% in June 2018 as compared to an increase of 0.5% in the previous month and decrease of 0.4% in June 2017.

The headline inflation index reported the highest growth in the last month of the current financial year on year-on-year basis which settled the average yearly CPI rate at 3.92 percent as compared to 4.15 percent CPI rate reported in financial year 2016-17.

The inflation rate has actually receded on a yearly basis despite currency devaluation of nearly 15%, higher global oil, and commodity prices with the subsequent direct impact on the prices in the local market.


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The decline in food inflation helped contain the headline numbers at low level, even though fuel prices rebounded. Meanwhile, with a continuous increase in education and healthcare costs, core inflation remained higher on average in FY18, compared to the same period last year. Its pace has nonetheless slowed in recent months.

Inventories of sugar, pulses and wheat in the country also contributed in keeping the inflation at low level. Their combined impact was strong enough to offset a higher level of non-food inflation stemming from strong domestic demand as well as a sharp increase in motor fuel prices. However, as the year progressed, food inflation crept up steadily as supply disruptions of key vegetables (tomatoes and onion) started to hit – by end December, the level of food inflation came closer to the nonfood inflation.

According to the analysts, CPI Inflation is expected to remain at or under 6% in the next financial year FY19, as per the targets, given no negative surprises on the global oil, commodities prices front, and most importantly the Rupee-Dollar parity.


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