Pakistan’s consumer inflation, which is measured through the Consumer Price Index (CPI), decreased to 12.40% in February 2020 as compared to January 2020.
According to the Pakistan Bureau of Statistics, the inflation reading for February was 2.16% lower than January’s 14.56%.
According to the data, the decrease in inflation was linked to a downfall in prices of general, perishable food items, food, nonalcoholic beverages, housing, electricity, gas, and fuel.
The Urban CPI with the base year (2015-16) recorded a decrease of 1.09% while Rural CPI recorded a decrease of 0.97%. The highest decliners for the month were tomatoes as its price decreased by 60.27% as compared to January, followed by eggs and electricity charges.
However, the inflation reading for the month (12.40%) was higher compared to February 2019’s reading of 12.03%.
According to the market expectations, the inflation rate came at 12.40% versus an expectation of 13.6%.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities Pvt told ProPakistani:
The consecutive decline in the SPI weekly numbers (further to come) was a leading indicator for a decline in the CPI estimates. Banning exports of and reducing duties on food imports, the government seemed absolutely resolute in bringing the inflation down that has cost them most political capital. Coronavirus impact also has shed oil prices down that is acting as a strong deflationary/growth stimuli. This has surely increased the odds of monetary easing very soon.
The Monetary Policy Committee headed by the Governor SBP Dr. Reza Baqir is expected to meet by the end of March to announce the monetary policy for the next two months.
Ossama Rizvi, an economic and geopolitical analyst stated,
We can assume that there might be a further decline in the inflation level, given the decrease in international oil prices (affecting electricity and LNG prices here). For SBP, reducing inflation is one of the key concerns. The earlier the ugly monster of inflation is controlled, the better it is for the populace and the government too.
The CPI on the new base year (2015-16) comprises urban CPI and Rural CPI. Urban CPI covers 35 cities and 356 consumer items. The Rural CPI covers 27 rural centers and 244 consumer items. In the new base year (2015-16) National CPI for 12 major groups is also computed by taking a weighted average of Urban CPI and Rural CPI.
Price Changes For Individual Items
Prices of the following commodities witnessed an increase on a month on month basis (MoM):
Vegetable ghee(13.15%), Cooking oil(10.27%), Sugar(8.45%), Mustard oil(4.25%), Fresh fruits(4.16%), Beans(3.89%), Butter(3.61%), Carpets(3.28%), Chicken (2.35%), Pulse moong (2.27%), Solid Fuel(1.19%) and Pulse mash(1.14%)
Prices of the following food items witnessed a decrease during the same period:
Tomatoes(60.27%), Eggs (26.36%), Liquefied Hydrocarbons(13.53%), electricity charges(13.48%).Potatoes(12.91%), Fresh vegetables(11.48%), Onions(8.79%), Wheat flour (5.29%), Wheat(3.52%), Pulse gram(2.34%), and Besan(2.33%)
Increased: Sugar(8%), Vegetable ghee(6.23%), Condiments and Spices(5.99%), Chicken(5.76%), Pulse Mash(5.13%), Pulse Masoor(4.27%), Pulse Moong(3.94%), Fresh fruits(3.56%), Beans(2.99%), Cooking oil(2.54%) Cleaning and Laundering (2.22%), Solid Fuel(1.64%), Mustard oil(1.63%) and Cotton Cloth(1.3%).
Decreased: Tomatoes(57.55%), Eggs(20.16%), Potatoes(15.43%), Fresh Vegetables(13.94%), Electricity Charges(13.48%), Onions(11.39%), Liquefied Hydrocarbons(6.70%), Gur(5.54%), Wheat Flour(3.57%), Pulse Gram(1.48%) and Fish(0.98%)
Year on Year
The inflation rate with base year (2015-16) for the month of February, 2020 increased by 12.40% over February 2019. The Urban CPI with base year (2015-16) recorded an increase of 11.21% while Rural CPI with base year (2015-16) recorded an increase of 14.22%. CPI with old base year (2007-08) recorded an increase of 12.03%.
The average inflation rate with base year (2015-16) for the period July-February (2019-20) was increased by 11.70% over July-February (2018-19).