Inflation drops to seven-month low in March

CPI inflation further slows from 12.4pc in Feb to 10.24pc in March

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ISLAMABAD: Pakistan’s Consumer Price Index (CPI)-based monthly inflation slowed to 10.24pc in March 2020 as compared to the previous month, Pakistan Bureau of Statistics (PBS) reported on Wednesday.

This is the second month in a row that the CPI reading has eased by more than 2pc. The bureau had recorded CPI inflation at 12.4pc in February. Inflation at 10.2pc is the lowest reading in the past seven months.

According to the PBS data, the commodity prices remained largely unchanged and markets functioned normally in March despite partial lockdown of the country to control the spread of coronavirus.

In addition to fuel charges, the prices of food items, including pulses, fresh vegetables and wheat, which have been the main drivers of inflation, also saw a significant downtrend, the bureau said.

However, it added, the real impact of slash in demand or short supply of commodities due to the shutdown of the market is yet to come.

“The government’s move to keep the trade of groceries unaffected may support the fall of inflation even in the coming months.”

The average inflation in the first nine months (July-March) of FY20 stood at 11.53pc, which in the same period of the last year was 6.3pc.

As per the data, the rate of inflation during the month under review slowed down both in urban and rural areas. Food inflation in urban areas that stood at 15.2pc in the preceding month eased to 13pc in March. Similarly, in rural areas, the food inflation pace slowed down from 19.7pc in February to 15.5pc last month.

The urban CPI inflation increased by 9.3pc on a year-on-year basis in March 2020, as compared to an increase of 11.2pc in the previous month and 8.9pc in March 2019. On a month-on-month (MoM) basis, it increased by 0.1pc in March 2020 as compared to a decrease of 1.1pc in the previous month and an increase of 1.9pc in March 2019.

On the other hand, the rural CPI inflation increased by 11.7pc on a year-on-year basis in March 2020 as compared to an increase of 14.2pc in the previous month and 8.2pc in March 2019. On a month-on-month basis, it decreased by 0.1pc in March 2020 as compared to a decrease of 1.0pc in the previous month and an increase of 2.2pc in March 2019.

In March, prices of the majority of perishable food items reduced as compared to February, which pulled the index down. On a year-on-year basis, PBS has reported 13.92pc reduction in electricity charges in March as there were no fuel adjustments in the month.

The prices of food and non-alcoholic beverages groups, which have 34.6pc weight in the CPI basket, surged 14.7pc in March over a year ago. The prices of perishable food items increased 15.3pc last month.

The alcoholic beverages and tobacco group inflation eased to 18.6pc last month from a month earlier level of 32.2pc. Similarly, the housing, water, electricity, gas and fuels group – having one-fourth weight in CPI basket, increased only 4.9pc last month. The transport fares, having 5.9pc weight in CPI basket, increased on an average 11.5pc in March over a year ago.

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