Country’s CPI surges by 4.2 per cent in May 2018

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KARACHI: Country’s Consumer Price Index (CPI) enhanced by 4.2 per cent on a year-on-year basis in May 2018 as compared to an increase of 3.7 per cent in the previous month and 5.0 per cent in May 2017. Meanwhile, inflation increased according to the analyst forecast.

On a month-on-month basis, it increased by 0.5 per cent in May 2018 as compared to an increase of 1.8 per cent in the previous month and increase of 0.0 per cent from May 2017.

The analyst has forecasted that the CPI inflation would further enhance owing to the rising petroleum prices and Ramzan prices. The government, however, delayed the announcement of increasing petroleum products prices till June 7.

According to the monetary policy announced by the State Bank of Pakistan (SBP), the average inflation is expected to remain between in range of 4.5 per cent – 5.5 per cent, while 2018-19 inflation is expected above 6.0 per cent.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7.0 per cent on (YoY) basis in May 2018 as compared to an increase of 7.0 per cent in the previous month and 5.5 per cent in May 2017.

On (MoM) basis, it increased by 0.2 per cent in May 2018 as compared to increase of 2.5 per cent in a previous month, and an increase of 0.2 per cent in the corresponding month of last year.

Core inflation, measured by 20 per cent weighted trimmed mean CPI (Core Trimmed) increased by 5.1 per cent on (YoY) basis in May 2018 as compared to 5.0 per cent in the previous month and by 4.8 per cent in May 2017. On (MoM) basis, it increased by 0.3 per cent in May 2018 as compared to an increase of 1.6 per cent in the previous month and an increase of 0.2 per cent in the corresponding month of last year i.e. May 2017.

The central bank has said the balance of risks to the sustainability of the healthy growth with low inflation has shifted due to deteriorating balance of payments and this was due to high petroleum prices and limited financial inflows.

The SBP believes that the economic growth is provisionally estimated to achieve a 13-year high level of 5.8 per cent for FY18. Concurrently, headline inflation remains moderate and is expected to stay well below the annual target of 6pc.

“Contrary to this, the average of year-on-year NFNE (non-food non-energy) core inflation during the last two months has risen to 6.4pc, which reflects the building up of inflationary pressures in the economy,” said the SBP.