ISLAMABAD, Pakistan, 1 February (Reuters) – Pakistan’s consumer price index (CPI) increased 13% from a year ago in January, the largest increase in two years, according to the government statistics department. According to a press statement from the Pakistan Bureau of Statistics, inflation was 12.3 percent in December.
Why is Pakistan’s inflation rate so high?
The new inflation reading may have an impact on interest rates set by the State Bank of Pakistan (SBP), which now bases policy rates on headline inflation rather than core inflation.
Analysts had projected inflation to be in the double digits, and current CPI inflation was in line with their expectations.
They projected that inflation would remain high year on year due to low base inflation last year, but that the rate would be determined by three factors: electricity prices, rupee-dollar parity, and foreign commodity prices.
An analyst at AHL, Sana Tawfiq, told Geo.tv that the inflation rate is in line with market expectations.
Tawfiq explained: “Non-food items such as housing and transportation fueled the year-over-year increase. Furthermore, last year’s base inflation was smaller.”
The transport index increased significantly, according to the researcher, as a result of rising oil costs on the worldwide market and their spillover effect on local petroleum product prices.
“A declining month-over-month inflation rate is a positive development, and it comes on the heels of an improvement in food inflation, which fell for the second month in a row,” she said.
Following the Monetary Policy Committee meeting last week, the national data-gathering agency released the most recent inflation figures. The interest rate was kept at 9.75 percent by the committee.
The Wholesale Price Index (WPI), which measures wholesale market prices, increased by 24 percent in January, compared to 6.4 percent the previous month.
According to the PBS, the general inflation rate increased in both urban and rural areas. In January, urban inflation dipped to 13%, but rural inflation soared to 12.9 percent, compared to the same month the previous year. In January of last year, the inflation rate in urban regions was 5%, while it was 6.6 percent in rural areas.
On a yearly basis, food inflation rates in rural and cities increased to 13.3 percent and 11.8 percent, respectively. Food inflation in rural and towns was 7.2 percent and 7.3 percent, respectively, in January 2021.
The rate of non-food inflation in urban regions was 12.8 percent and 13.9 percent in rural areas, respectively, compared to 3.7 percent and 6.1 percent in the same month last year.
Core inflation, which excludes food and energy, increased by 8.2% in urban areas and 9% in rural regions in the month under review, according to the national data collection agency.
In comparison to the same month a year ago, the food group recorded a price increase of 12.82 percent in January. Prices of non-perishable food items increased by 13.77 percent on an annualized basis within the food group, while prices of perishable goods decreased by 6.43 percent year over year.
Housing, water, electricity, gas, and fuel inflation jumped 15.53 percent year over year in the last month, accounting for one-fourth of the basket’s weight.
In January, the average price of apparel and footwear jumped by 11.18 percent. Transportation costs increased by 23.05 percent (year-on-year).
According to the PBS, the price of pulse masoor increased by 6.13 percent month over month, followed by a 4.79 percent increase in gram whole, 4.11 percent increase in fruits, and over 3 percent increase in wheat. Meat and rice prices increased by 1.78 percent and 1.28 percent, respectively, in the previous month.
According to the PBS, the average inflation rate for the first seven months of the current fiscal year (July – January) was 10.26%.
Tawfiq projected that the central bank would maintain the status quo at its next monetary policy meeting, which is set for March 8. She also stated that interest rates should stay the same till the end of the current fiscal year 2021-22.
Meanwhile, Tawfiq projected that, as a result of the government’s efforts to control food inflation, month-on-month inflation will fall in the next months.
“Overall inflation will fall as the base effects fade,” she said, adding that the respite will be accompanied by a drop in food inflation.
However, the expert pointed out that there are several elements that can influence the inflation rate, such as electricity costs and the Ramzan factor.
Meanwhile, due to base effects and rising energy prices, central banks have predicted that inflation will remain high in the near term.
What is the current rate of inflation?
According to U.S. Labor Department data published March 10, the annual inflation rate in the United States was 7.9 percent for the 12 months ended February 2022, the highest since January 1982 and after reaching 7.5 percent earlier. On April 12, at 8:30 a.m. ET, the next inflation update will be released. It will provide the inflation rate for the 12-month period ending March 2022.
Annual US inflation rates are shown in the chart and table below for calendar years 2000 to 2022. (Historical inflation rates can be found here.) The US Inflation Calculator can be used to calculate accumulated rates between two separate dates.
What is India’s current inflation rate?
The Reserve Bank of India (RBI) is attempting to calm fears about rising prices, but Indian households may end up bearing the brunt of the burden.
India’s retail inflation increased to 6.01 percent in January, just above the top limit of the Reserve Bank of India’s tolerance zone, due to rising costs of food and manufactured goods, according to data released on Feb. 14. From a revised 5.66 percent in December to 4.06 percent in January 2021, the consumer price index (CPI) reached its highest level in seven months.
What is the inflation rate in China?
Inflation in China was 2.42 percent in 2020, down 0.48 percent from 2019. In 2019, China’s inflation rate was 2.90 percent, up 0.82 percent from 2018. The annual inflation rate in China was 2.07% in 2018, up 0.48 percent from 2017. In 2017, China’s inflation rate was 1.59 percent, down 0.41 percent from 2016.
Is inflation beneficial or harmful?
- Inflation, according to economists, occurs when the supply of money exceeds the demand for it.
- When inflation helps to raise consumer demand and consumption, which drives economic growth, it is considered as a positive.
- Some people believe inflation is necessary to prevent deflation, while others say it is a drag on the economy.
- Some inflation, according to John Maynard Keynes, helps to avoid the Paradox of Thrift, or postponed consumption.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.