ISLAMABAD-Inflation has skyrocketed to 12.7 percent in December mainly driven by an increase in prices of food items.

Inflation, measured through the Consumer Price Index (CPI), has come down by 0.34 percent in December over the previous month (November), the Pakistan Bureau of Statistics (PBS) reported on Wednesday. Inflation with new base year (2015-16) has increased by 12.42 percent in December 2019. Meanwhile, on old methodology (base 2007-08), the inflation has gone to 12.63 percent in the previous month (December 2019) over the corresponding period of last year.

The International Monetary Fund (IMF) had recently projected that inflation would decelerate slightly to 11.8 percent in ongoing fiscal year (FY 2020) as against 13 percent of its earlier projection as administrative and energy tariff adjustments are expected to offset the effects from weak domestic demand. Thereafter, inflation is expected to converge to SBP's 5–7 percent medium term objective, hitting the midpoint by FY 2022. The government had already estimated that inflation in would remain in range of 11 percent and 13 percent for the current fiscal year.

However, the inflation may surge in the month to come due to increase in oil prices. The government on Tuesday upward revised the POL prices and increased the rates of petrol by Rs 2.61 per litre and High Speed Diesel (HSD) by Rs 2.25 per litre for the month of January, 2020.

According to the PBS, inflation was recorded at 11.11 percent during first six months (July to December) of the current fiscal year. Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 14.87 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 13.31 percent in the period under review.

The break-up of inflation of 12.63 percent in December 2019 showed that food and non-alcoholic beverages prices increased by 19.74 percent. Similarly, health and education charges went up by 11.3 percent and 6.03 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 8.53 percent in last the month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 18.27 percent. Price of clothing and footwear increased by 9.7 percent and furnishing and household equipment maintenance charges 10.44 percent. Recreational charges and those related to culture went up by 6.75 percent in the period under review, while amounts charged by restaurants and hotels by 6.11 percent in December 2019 as compared to the same month last year.

The PBS has also changed the weights assigned to various consumption items in the goods basket, and introduced a new panel of prices to be obtained from urban and rural areas. As per data, the urban CPI covers 35 cities and 356 consumer items while rural tracks 27 rural centres and 244 items.

In urban areas, the food items which saw their price increased during December 2019 included: dry fruits (6.35 percent), wheat (5.62 percent), eggs (4.61percent), woolen readymade garments (2.72percent), tailoring (2.36 percent), fresh fruits (2.3 percent), construction input items (2.06 percent), pulse moong (1.88 percent), pulse mash (1.84 percent), cooking oil (1.71 percent), electricity charges (1.54percent), beans (1.22 percent), fish (1.22 percent) and woollen cloth (1.15 percent).

On the other hand, items that declined in urban were tomatoes (36.49 percent), onions (12.45 percent), chicken (11.21 percent), fresh vegetables (4.62 percent), sugar (3.54 percent), potatoes (1.96 percent), motor fuel (0.18 percent), and liquefied hydrocarbons (0.05 percent).

In the rural areas, items that witnessed inflation increase included pulse masoor (3.88 percent), pulse mash (3.8percent), wheat (3.46 percent), fresh fruits (3.25percent), cooking oil (3.2percent), pulse moong (3.19 percent), eggs (2.99percent), pulse gram (2.7 percent), vegetable ghee (2.49 percent), gram whole (2.27 percent), besan (2 percent), electricity charges (1.54 percent), potatoes (1.31 percent), fish (1.18 percent), dry fruits (1.17 percent), medical tests (1.13 percent) and woolen readymade garments (1.13 percent).