Pakistan & Gulf Economist

Review of CPI during July-April fy2020

According to the Economic Survey of Pakistan FY2020, the headline inflation measured through the Consumer Price Index (CPI) is registered at 11.22 percent during Jul-April FY2020 as compared to 6.51 percent during the corresponding period previous year. Statistics showed that perishable food items are the main contributory factor in jacking up the food inflation in the Food and Non-alcoholic Beverages group, as it is registered at 34.7 percent against the fall of 7.1 percent during the corresponding period.

The experts also revealed that inflation in non-perishable food items is registered at 12.4 percent as compared to 5.5 percent during previous year. An important increase in FED on cigarettes put upward pressure on the alcoholic beverages & tobacco, which registered at 21.9 percent during Jul-April FY2020 as compared to 10.7 percent the corresponding period previous year. The housing, water, electricity, gas & other fuel are registered at 7.1 percent during Jul-April FY2020 as compared to 8.2 percent during the corresponding period previous year. It has a weight of 23.6 percent, thus any untoward movement directly affects the vulnerable segment of the Pakistani society.

It is said that stable inflation is always associated with better growth and development outcomes. Price stability not only reduces uncertainty but also offers multi-dimensional optimistic impacts on social, economic, and psychological spheres of all segments of the society, mainly poor families. Ongoing COVID-19 outbreak has negatively affected the whole economy mainly daily wagers and the poor. The Government of Pakistan has planned accordingly and is efficiently using all available resources to combat this pandemic, thus performing better than many financially stable countries. The Government of Pakistan also proclaimed an economic relief and stimulus package of almost Rs 1.24 trillion, the highest ever in history, to support the poor and assist the local industry to offset the pessimistic impact of the coronavirus outbreak in Pakistan. Most importantly, to further facilitate the public, the Government of Pakistan reduced the prices of various petroleum items ranging from Rs 15 to Rs 30 on May 1, 2020. Earlier, the petroleum products prices were declined by up to Rs 7 per liter for the month of March and subsequently Rs 15 per liter in April. The reduction in petroleum prices in March and April more decelerated the inflation rate as evident from the data of April.

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Rural areas

CPI inflation-rural grew by 9.8 percent on a year-on-year basis in April 2020 as against to a rise of 11.7 percent in the last month and 8.1 percent in April 2019. The Rural Food and Non-Food inflation registered at 12.9 percent and 7.4 percent as against to 15.5 percent and 8.5 percent respectively in the last month.kamal1pic2 During the period Jul-April FY2020, CPI rural recorded at 12.0 percent as against to 6.0 percent during the same period last year. In rural areas, commodities that recorded increase in prices during April 2020 over April 2019 were: potatoes (103.48 percent), pulse moong (94.41 percent), pulse mash (56.15 percent), pulse masoor (45.11 percent), onions (38.93 percent), beans (34.48 percent), vegetable ghee (29.47 percent), eggs (29.26 percent), pulse gram (28.54 percent), gur (27.05 percent), cooking oil (26.84 percent), sugar (24.54 percent), wheat (21.88 percent), besan (20.92 percent), wheat flour (18.13 percent), rice (12.75 percent), doctor clinic fee (18.37 percent) and readymade garments (10.65 percent). The items recording falls in their prices are tomatoes (56.28 percent), chicken (28.5 percent), fish (0.02 percent) and electricity charges (5.88 percent).

Urban areas

CPI inflation-urban grew by 7.7 percent on year-on-year basis in April 2020 as against to a rise of 9.3 percent in the last month and 8.4 percent in April 2019. The Urban Food and Non-Food inflation registered at 10.4 percent and 6.2 percent as against to 13.0 percent and 7.3 percent respectively in the last month. During the period Jul-April FY2020, CPI urban registered at 10.7 percent as compared to 6.9 percent during the corresponding period previous year. In urban areas, the following items registered rise in prices during April 2020 as against April 2019: pulse moong (101.1 percent), potatoes (92.26 percent), pulse mash (67.89 percent), pulse masoor (47.67 percent), eggs (44.16 percent), onions (40.72 percent), gur (33.75 percent), pulse gram (31.22 percent), beans (29.92 percent), besan (29.01 percent), sugar (27.80 percent), vegetable ghee (26.31 percent), cooking oil (22.21 percent), wheat (16.76 percent), wheat flour (14.82 percent), meat (13.75 percent), gram whole (12.52 percent), tea (9.54 percent), gas charges (54.84 percent), construction input items (16.6 percent), motor vehicles (13.59 percent), drugs and medicines (13.03 percent), footwear (11.49 percent) and motor vehicle accessories (11.25 percent). Furthermore, items that recorded price falls in urban areas were tomatoes (55.44 percent), chicken (28.76 percent), fish (2.52 percent), electricity charges (5.88 percent) and liquefied hydrocarbons (2.34 percent).

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