ISLAMABAD The News said on Tuesday that Pakistan’s poor and middle class will continue to bear the brunt of the country’s high monthly inflation rate, which is expected to reach 29.66% in December 2023 as a result of rising food and energy prices.
From the previous month, there was a 0.46% increase in the inflation rate. On the other hand, core inflation—which does not include food and energy costs—reached 18.2%, a 10-month low.
Policymakers at the State Bank of Pakistan (SBP) may decide to lower the discount rate the following month in an effort to boost growth and economic activity in response to this decline.
The government had predicted 25.5 to 26.5% in early December, but the increase in headline inflation as measured by the consumer price index (CPI) is ascribed to high food and energy prices.
Inflation increased by 0.8% in November as opposed to 2.7%,Notably, the CPI increased early in November from 26.9% in October to 29.2%, mostly as a result of a large increase in gas tariffs. It increased again to 29.66% in December, primarily due to higher electricity bills and particularly to positive monthly fuel price adjustments (FCA).
One significant element is the increase in housing and energy prices, which increased by 37.68% from November’s 32.97%. This group accounts for over one-fourth of the weight in the CPI basket. These items became 3.56% more expensive each month compared to the preceding one.
Average inflation during the first half of the fiscal year (July–Dec 2023–24) was 28.8%, beyond the SBP’s range of 20 to 22% and the government’s objective of 21%.
December YoY food inflation was 27.5%, little less than that of the previous month.Tobacco and alcoholic drinks kept their 82.8% inflation rate steady, rising by 0.5% from November.
Costs associated with recreation and culture dropped to 38.48% from 53.56% in November. In December, YoY communication charges were 7.4%, as they were the month before. Moreover, education stands at 13.5%, essentially constant year over year and up 0.23% month over month.
Transport costs rose from 26.5% to 28.6% in the preceding month. December’s transportation costs were 0.8% more expensive than they were the prior month.
November had a 31.4% increase in hotel and restaurant fees, and December saw a 30.7% increase over the previous year. It was, nevertheless, up 0.72% over the prior month.
While furnishings had a 0.9% increase from the previous month, they were 32.5% more expensive than they were in the same month last year. The cost of health care rose by 0.7% per month and by 23.36% annually.
Core inflation has been rising monthly but falling year over year, which is an important consideration when setting policy rates. It was 15.4% in January 2023 and fluctuated in the following months, peaking at 18.2% in December. February 2023 was 17.1%, March 18.6%, April 19.5%, May 20% (a record high), June 18.5%, July and August at 18.4% apiece, September 18.6%, October 18.5%, and November at 18.6%. No other months’ figures were available.
Producer prices are gauged by the wholesale pricing index (WPI), which increased from 26.4% in November to 27.3% in December.Rural inflation was 27.9%, while urban inflation was 30.9%. Urban inflation was 30.4% while rural inflation was 27.5% in the prior month.
The cost of onions grew by 30.8% over the course of a month, along with that of dry fruits, masoor pulse, 5.1%, eggs, 4.7%, pan-prepared foods, 4.4%, gram pulse, 3.7%, fish, 2.5%, sugar, 2.2%, wheat, pulse moong, 2%, mash pulse, 1.2%, wheat flour, 0.8%, powder milk, 0.3%, and meat.
Nevertheless, the price of tomatoes dropped by 42%, potatoes by 18.6%, tea by 8.6%, chicken by 4.2%, gur by 3.5%, vegetable ghee by 2.7%, rice by 2.7%, fresh fruits and vegetables by 1.65%, cooking oil by 1.6%, sauces and spices by 1.45%, and whole grains by 0.76%.
On a month-over-month basis, the cost of non-food products increased for electricity (15.76%), transportation services (12%), woollen ready-made clothing (4.02%), solid fuel (2.4%), and construction (
