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CPI, SPI and WPI in statistics

According to the Pakistan Bureau of Statistics (PBS) the consumer price index (CPI) inflation general, grew by 9.7 percent on yearly basis in June 2021 as compared to a rise of 10.9 percent in the previous month and 8.6 percent in June 2020. On Monthly basis, it fell by 0.2 percent in June 2021 as compared to a rise of 0.1 percent in the previous month and a rise of 0.8 percent in June 2020. The CPI inflation Urban, grew by 9.7 percent on yearly basis in June 2021 as compared to a rise of 10.8 percent in the last month and 7.6 percent in June 2020. On Monthly basis, it decreased by 0.4 percent in June 2021 as compared to an increase of 0.2 percent in the previous month and an increase of 0.7 percent in June 2020. PBS also registered that CPI inflation Rural, increased by 9.7 percent on yearly basis in June 2021 as compared to an increase of 10.9 percent in the last month and 10.0 percent in June 2020. On Monthly basis, it decreased by 0.1 percent in June 2021 as compared to a decline of 0.03 percent in the previous month and an increase of 1.0 percent in June 2020.

Furthermore, the Government of Pakistan officials also identified that the price stability is prime concern of every government as high and variable inflation not only erodes purchasing power of consumers but also discourages investment. A controlled inflationary environment contributes to financial stability and economic growth. Inflation is caused through both demand and supply side of market forces. However, demand-side inflation can be controlled through prudent government expenditure policy and restricting government to borrow from the central bank. It is also recorded that on supply-side not only cost of input matters but restriction on the free mobility of transportation can interrupt smooth supply chain of goods and services. A real time example has been seen during lock down to avoid adverse impact of Covid-19 pandemic. They also registered that the Covid-19 pandemic resulted in large shocks to both demand and supply hence inflation was observed in the whole world. Historically, it was observed that inflation had risen sharply during and aftermath of major wars and same was predicted in this pandemic.

In our country Pakistan, by the end of FY2020, the inflation rate stabilized and turned out to be single digit chiefly because of the government prudent demand management strategies. In this regard, government borrowing from the State Bank of Pakistan (SBP) was avoided as a policy decision. In the start of FY2021, it is also said that major contribution to inflation in both urban and rural baskets derived from food group mainly because of extended monsoon season. No doubt the present Government of Pakistan realizing the significance of supply disruption started establishing Sahulat/Bachat Bazars in Pakistan. The rise in the prices of global agrarian products and other commodities particularly oil contributed to local inflation also. As far as, oil prices are concerned, the government does not pass on proportional increase of crude oil prices in global market to the general public in order to sustain price stability. During first 10-month of FY2021, National CPI inflation for FY2021 stayed lower than last year. Administrative measures including crackdown on speculative elements and resumption of seasonal supplies of perishables assisted to retain the inflationary pressures. Moreover, tax relief measures in Budget 2020-21 in response to the ongoing pandemic also provided relief in terms of stable prices of various goods. The government ensured smooth supply of essential domestic goods by allowing imports of essential commodities like wheat and sugar. Statistics also showed that a Ramazan package of Rs 7.8 billion was provided by Utility Store Corporation for offering essential items to general public at affordable prices.

Statistics of PBS also registered that the sensitive price index (SPI) inflation on yearly increased by 17.6 percent in June 2021 as compared to a rise of 19.7 percent a month earlier and a rise of 11.5 percent in June 2020. On MoM basis, it decreased by 0.4 percent in June 2021 as compared to a rise of 0.8 percent a month earlier and a rise of 1.4 percent in June 2020. PBS data furthermore showed that the whole price index (WPI) inflation on yearly basis grew by 20.9 percent in June 2021 as compared to a rise of 19.4 percent a month earlier and a rise of 0.9 percent in June 2020. WPI inflation on MoM basis grew by 0.9 percent in June 2021 as compared to a rise of 0.3 percent a month earlier and a decline of 0.3 percent in corresponding month i.e. June 2020.

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