ISLAMABAD - Inflation rate was higher at 6.5 percent during November mainly due to the economic policies of enhance power and gas tariffs, depreciating currency and impact of the mini budget.

Inflation measured by Consumer Price Index (CPI) was only 4 percent in the same month of previous year, according to Pakistan Bureau of Statistics (PBS). However, the inflation has ballooned to 6.5 percent in November this year as a result of the economic policies of the government. The PTI led government had taken tough decisions of increasing power and gas tariffs, petroleum products prices, depreciating the currency and announcing the mini budget during its first hundred days in office.

The State Bank of Pakistan (SBP) has recently further depreciated the currency, which would fuel the inflation in the months to come. Dollar had surged to all time high Rs144 on Friday, which later settled at Rs138. Market sources informed that dollar would fluctuate at around Rs137 to Rs140 in next few days.  Following increase in inflation rate, the SBP had raised the key lending rate by 150 basis points (bps) to 10 percent effective from 3rd December 2018. According to the SBP, the near term challenges to Pakistan’s economy continue to persist with rising inflation, an elevated fiscal deficit and low foreign exchange reserves.

The SBP in its recent monetary policy had projected headline CPI inflation for current fiscal year (FY19) in the forecast range of 6.5–7.5 percent, above the annual target of 6.0 percent. “Average headline CPI inflation during the first four months of FY19 has increased to 5.9 percent as compared to 3.5 percent in the corresponding period of FY18. This trend is even more pronounced for core inflation, which indicates growing inflationary pressures in the economy. A disaggregated analysis reveals that this is due to both, demand and supply side factors,” the SBP noted. The International Monetary Fund (IMF) in recent talks with Pakistan had estimated that inflation rate may touched 14 percent during ongoing fiscal year.

According to the latest data of PBS, the CPI based inflation has recorded at 6.02 percent during first five months (July to November) of the ongoing fiscal year. Meanwhile, the Sensitive Price Indicator (SPI), which gauges rates of kitchen items on weekly basis, increased by 2.08 percent. Similarly, the wholesale price index (WPI) based inflation enhanced by 11.48 percent in the period under review.

According to the PBS, on month-on-month basis, inflation increased by 0.1 percent in November 2018 as compared to an increase of 2.3 percent in the previous month. Meanwhile, core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.3 percent on annual basis in November 2018 as compared to an increase of 8.2 percent in the previous month and 5.5 percent in November 2017

The break-up of inflation of 6.5 percent in November 2018 showed that food and non-alcoholic beverages prices increased by 1.02 percent. Similarly, health and education charges went up by 9.44 percent and 10.01 percent, respectively. Similarly, prices of utilities (housing, water, electricity, gas and fuel) increased by 9.11 percent last month. Meanwhile, the prices of alcoholic beverages and tobacco went up by around 13.91 percent. Price of clothing and footwear increased by 7.49 percent and furnishing and household equipment maintenance charges 7.48 percent. Recreational charges and those related to culture went up by 8.71 percent in the period under review, while amounts charged by restaurants and hotels by 4.72 percent in November 2018 as compared to the same month last year.

In food commodities, price of chicken increased by 14.78 percent, eggs price enhanced by 10.2 percent, potatoes price went up by 6.99 percent, fish price by 4.03 percent, pulse mash price surged by 3.6 percent during November as compared to October. In non-food commodities, price of woolen readymade garment increased by 4.69 percent, motor fuel enhanced by 4.09 percent, woollen cloths price surged by 3.37 percent, and kerosene oil price enhanced by 2.33 percent. Meanwhile, price of motor vehicles and construction wages rates have also recorded increase during the period under review.

According to the PBS figures, price of tomatoes decreased by 43.72 percent, fresh fruit price reduced by 7.56 percent and onions price down by 7.51 percent.