By Staff Reporter
ISLAMABAD: Pakistan’s inflation rate fell for the third straight month in August, reaching its lowest level since January, official data showed on Friday, defying the price hikes that have hit consumers hard amid a fragile economic recovery.
The annual inflation rate dropped to 27.38 percent last month from 28.3 percent in July and a record high of 38 percent in May, according to the Pakistan Bureau of Statistics. The consumer price index, a key measure of inflation, also declined to 29.4 percent from 38 percent in May.
The data revealed a contrary trend to the evident price hikes affecting consumers on the ground, especially in food and fuel.
The bureau also reported a surprising decrease in electricity charges by 1.37 percent over July and 8.24 percent over August last year, despite multiple increases imposed by the government that sparked widespread protests.
The inflation rate remained above the target of 25 percent set by the central bank, which has raised interest rates to 22 percent to curb inflation and stabilize the currency. The rupee fell 6.2 percent last month, hitting all-time lows against the dollar.
Pakistan is facing a challenging economic situation under a caretaker government after securing a $3 billion loan program from the International Monetary Fund in July to avert a sovereign debt default. The IMF-backed reforms, which include easing import restrictions and removing subsidies, have fueled inflation and currency depreciation.
The worsening economic conditions, along with rising political tensions ahead of a national election scheduled for November, have triggered sporadic protests across the nation.
Authorities also raised petrol and diesel prices to record highs on Friday.
Core inflation, which excludes food and energy prices, increased by 18.4 percent year-on-year in urban areas and by 25.9 percent year-on-year in rural areas in August, showing persistent upward pressure on prices.
Food inflation, which accounts for over one-third of the CPI basket, rose by 38.51 percent year-on-year in August, driven by sharp increases in prices of wheat flour, tea, condiments and spices, sugar and chicken.
On a monthly basis, food prices that increased significantly include tomatoes, eggs, sugar and beverages.
Housing, water and electricity, which contributes around 24 percent to the CPI, rose by 6.25 percent year-on-year and 1.08 percent month-on-month in August. Transport index, mainly comprising of fuel prices, increased by 7.92 percent month-on-month and 22.96 percent year-on-year in August.
Analysts expect monthly CPI inflation to remain on the higher side amid recent hikes in local fuel and electricity prices. On a year-on-year basis, inflation is likely to come down but at a much slower pace than earlier due to falling rupee.
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