A Look at Inflation in Pakistan Over the Last 12 Months

The Pakistan Bureau of Statistics (PBS) has released its monthly review of price indices for December 2018. Using these reports for 2018, we can get a fair estimate of inflation in Pakistan in 2018.

We’re also going to be defining some of the common terms and metrics used by the PBS to monitor inflation in Pakistan.

CPI Inflation General: 

CPI stands for Consumer Price Index. It aims to measure the price of a fixed basket of goods, which are products used by consumers on a daily basis. So it could include things like the cost of milk, eggs, flour and so on.

CPI Inflation General is generally accepted as a measure of inflation and captures how expensive or cheaper it is for regular consumers to buy products they use every day and as such, it’s an important metric because it shows how the buying power of a common man is being impacted.

In Pakistan, CPI inflation General increased by 6.2% on a year-on-year basis in December 2018 as compared to an increase of 6.5% in the previous month and 4.6% in December 2017.

On a month-on-month basis, it decreased by 0.4% in December 2018 as compared to an increase of 0.1% in the previous month and a decrease of 0.1% in December 2017.

Core Inflation:

Core inflation is determined using the CPI but omits the food and energy sectors from its calculations. That’s because food and energy are considered too volatile and even if they are expensive, their demand seldom lessens.

Core inflation is considered to be a more accurate measure of long-term inflation.

In Pakistan, the items that are included in the core inflation are about 54% of the CPI basket.

The core inflation in Pakistan increased by 8.4% on (YoY) basis in December 2018 as compared to an increase of 8.3% in the previous month and 5.5% in December 2017.

On (MoM) basis, it increased by 0.3% in December 2018 as compared to an increase of 0.4% in the previous month, and an increase of 0.2% in the corresponding month of last year i.e. December 2017.

Core Inflation Trimmed:

The Core Inflation Trimmed is a measure which excludes the top 10% and bottom 10% of goods and services which show the most volatility in prices. This means that the same basket might not be used to calculate the Core Inflation Trimmed each month as items which vary wildly in prices can be different each month.

CPI (Core Trimmed) increased by 6.9% on (YoY) basis in December 2018 as compared to 6.7% in the previous month and by 4.7% in December 2017. On (MoM) basis, it increased by 0.3% in December 2018 as compared to an increase of 0.3% in the previous month and an increase of 0.2% in the corresponding month of last year i.e. December 2017.

SPI Inflation:

The Sensitive Price Inflation (SPI) is used to calculate the price movement of essential consumer goods on a weekly basis. It gives an estimate of the price situation in the country at a more granular level.

SPI inflation on YoY basis increased by 2.0% in December 2018 as compared to an increase of 1.3% a year earlier and an increase of 2.2% in December 2017.

On a MoM basis, no change was observed in December 2018 as compared to an increase of 0.3% in the previous month and a decrease of 0.7% in the corresponding month of last year i.e. December 2017.

WPI Inflation:

The Wholesale Price Inflation (WPI) simply measures the change in prices in the wholesale market.

WPI inflation on YoY basis increased by 12.1% in December 2018 as compared to an increase of 13.5% a month earlier and an increase of 3.4% in December 2017. WPI inflation on MoM basis decreased by 0.9% in December 2018 as compared to an increase of 0.7% a month earlier and an increase of 0.4% in the corresponding month of last year i.e. December 2017.

You can check out the full report here: PBS Inflation Report for December 2018



>