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Pakistan’s Consumer Inflation Fell 1.10% in August 2020: PBS

Pakistan’s consumer (CPI) inflation eased to 8.20% in August from 9.30% in July 2020.

According to the Pakistan Bureau of Statistics, CPI increased by 8.20% in August 2020 as compared to an increase of 9.30% in the previous month and 10.50% in August 2019.

The major reason behind the deviation was a larger than expected drop in prices of perishable food items. Analysts were expecting a downtrend in inflation in August due to declining prices of food items.

A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities told ProPakistani,

The inflationary trend is expected to recede in the next few months as food prices get controlled due to imported supplies. The days of double-digit inflation are behind us for now. SBP has already shown willingness to keep real interest rates negative.

Prices of chicken decreased by 36.45% in August over July, followed by tomatoes (31.83%), fresh fruits (23.15%), pulse moong (6.5%), vegetables (2.78%), pulse mash (2.28%), fish (1.87%), gram whole (1.78%), eggs (1.33%), pulse gram (1.29%), chickpea flour (besan) (1.21%), pulse masoor (0.98%), vegetable ghee (0.86%) and cooking oil (0.59%). Prices of chicken also decreased 38.28% year-on-year, followed by onions (33.02%), fish (8.5%), and fresh fruits (1.32%).

There was an increase in prices of sugar, wheat, bakery, confectionery, fresh milk, and readymade food, a monthly review of price indices released by the Pakistan Bureau of Statistics (PBS) revealed.

Sugar prices were up by (13.53%), followed by wheat (11.95%), wheat flour (5.44%), wheat products (6.85%), bakery and confectionary (6.65%), beans (5.01%), milk fresh (4.79%), spices (2.81%), readymade food (2.22%), and rice (0.31%) in August 2020 in urban areas.

The non-food items that saw an increase in prices were electricity charges (11.61%), transport services (5.41%), cleaning and laundering (4.47%), motor fuel (3.34%), construction wage rates (1.44%), medical tests (1.29%), and household equipment (1.12%).

PBS said that on a month-on-month (MoM) basis, CPI increased by 0.63% in August 2020 as compared to an increase of 2.5% in the previous month, and an increase of 1.6% over August 2019.

The average CPI in July-August 2020 eased to 8.74%, from 9.44% the year before.

CPI inflation urban increased 7.1% on a year-on-year basis in August compared to an increase of 7.8% in the previous month and 10.6% in August 2019. On a month-on-month basis, it increased by 0.8% in August as compared to an increase of 2.2% in the previous month and an increase of 1.5% in August 2019.

CPI inflation rural increased 9.9% on a year-on-year basis in August compared to an increase of 11.6% in the previous month and 10.3% in August 2019.

On a month-on-month basis, it increased by 0.4% in August 2020 as compared to an increase of 3% in the previous month and an increase of 1.9% in August 2019.

In rural areas, price increases were seen for sugar 13.31%, wheat 7.89%, wheat flour 4.36%, potatoes 3.73%, sweetmeat 2.63%, milk fresh 1.79%, rice 1.76%, eggs 1.43%, ready-made food 0.91% and meat 0.74%.

On the other hand, drag on price levels came from tomatoes, which fell 33.94%, chicken 31.9%, fresh fruits 25.42%, pulse moong 9.66%, vegetables 8.66%, pulse mash 4.55%, spices 3.51%, pulse gram 3.41%, gram whole 2.47%, chickpea flour (besan) 1.94%, pulse masoor 1.57% and onions 0.4%.

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