Business

Inflation clocks in at 13.8% in May

Published

2 years ago

Farwa

Increase comes on back of a surge in prices of non-perishable food items.
On a month-on-month basis, inflation increased by 0.4% in May.
Cumulatively, 11MFY22 average inflation reached 11.29% year-on-year.

KARACHI: The inflation rate, based on the Consumer Price Index (CPI) in May clocked in at 13.8% on a year-on-year basis — the highest since January 2020 — due to a surge in prices of non-perishable food items.

The CPI accelerated in May over the same month a year ago, showed the inflation bulletin released by the Pakistan Bureau of Statistics (PBS) on Wednesday. The index remained higher in line with the trend since the last three months.

The new coalition government of Prime Minister Shehbaz Sharif struggles to contain inflation, which experts said, was the outcome of record-high global commodity prices, and a 26% devaluation of the Pakistani rupee since the start of the outgoing fiscal year.

On a month-on-month basis, inflation slowed down as it clocked in at 0.44% in May 2022 compared to an increase of 1.6% in the previous month and an increase of 0.1% in May 2021. Cumulatively, 11MFY22 average inflation reached 11.29% year-on-year compared to 8.83% in 11MFY21.

The CPI-based inflation rate jumped 12.4% in urban areas and 15.9% in villages and towns, according to PBS.

Speaking to Geo.tv, an analyst from Arif Habib Ltd, Sana Tawfiq, said that the inflation rate was below the market expectation of 14.3%.

“An increase came on the back of three sectors — food, transport, and housing and electricity,” she said.

Tawfiq elaborated that an increase in food group month-on-month was in line with expectation, citing poultry items and wheat as major drivers.

The analyst was of the view that the impact of a significant increase in the price of petroleum products was partially reflected in May’s inflation rate; however, the complete impact would be seen in June’s number.

The inflation rate remained in double-digit — which has eroded the people’s purchasing power — due to an increase in the prices of food items, which are now taxed by the government. The pace of food inflation surged 15.5% in cities and 19% in villages and towns last month.

The prices of both non-perishable and perishable food products increased significantly last month. The food group saw over a 17% increase in prices in May compared to the same month a year ago. Prices of perishable food items increased 26.37%, according to the PBS.

Non-food inflation increased 10.4% in urban areas and 13.1% in rural areas, according to the national data collecting agency.

Core inflation — calculated after excluding food and energy goods — jumped 9.7% in urban areas and 11.5% in rural areas. Tawfiq maintained that a continuous increase in core inflation is a “major concern.”

The prices of tomatoes — an essential kitchen item — were higher by 162.22% last month compared to a year ago, followed by a 153.44% increase in the rates of onions, and around 60% of various types of ghee and cooking oil, according to the PBS.

The prices of pulses increased by over 50%, wheat by 18.42%, and meat and vegetables by nearly one-fourth and vegetables, according to the PBS.

“Going forward, the inflation rate would remain under pressure and in double digits for the next three months; it would start easing from September onwards,” the analyst said.

Regarding the monetary policy rate, scheduled to be announced on July 7, she noted that the central bank is expected to raise the policy rate by another 100-150 basis points.

Business

Pakistan has amassed $14.5 billion in foreign exchange reserves.

Published

7 hours ago

Farwa

State Bank of Pakistan (SBP) statistics, which was made public on May 3, shows that the country’s foreign exchange reserves increased significantly to $14.45 billion.

A noteworthy increase of $1.11 billion to $9.12 billion was made in the SBP’s reserves.

The foreign exchange reserves that commercial banks possessed also experienced a notable surge, rising by $2.86 billion to $5.33 billion.

As per the State Bank of Pakistan (SBP), Pakistan got the $3 billion standby arrangement last month, including the much-awaited $1.1 billion final tranche from the International Monetary Fund (IMF).

Following the successful conclusion of the second review by the Executive Board of the IMF under Stand-By Arrangement (SBA),” the SBP stated that it had been awarded Special Drawing Rights (SDR) 828 million, or $1.1 billion in value.

SBP reserves for the week ending on May 3, 2024, will show the payout, according to the central bank.

The second review of Pakistan’s Stand-By Arrangement (SBA) was finished by the IMF Executive Board one day earlier, enabling a $3 billion increase in total disbursements under the contract.

According to a statement from the IMF, “the completion of the second and final review reflects the authorities’ stronger policy efforts under the SBA, which have supported the stabilization of the economy and the return of modest growth.”

“Policy and reform efforts by the authorities, including strict adherence to fiscal targets, are necessary to move Pakistan from stabilization to a strong and sustainable recovery,” the statement continued.

Business

In April, worker remittances rose by 27.9 percent year over year.

Published

8 hours ago

Farwa

Based on the central bank’s data, the United Arab Emirates (US$ 542.3 million), the United Kingdom (US$ 403.2 million), Saudi Arabia (US$ 712.0 million), and the United States of America (US$ 329.2 million) were the top four countries from which remittance inflows in April 2024 originated.

The SBP said in a statement that “for the first ten months of the current fiscal year, workers’ remittances increased by 3.5 percent cumulatively, with inflow of US$ 23.8 billion, as compared to the same period last year.”

Previous records show that in March 2024, remittances from overseas workers totaled US$3 billion.

Regarding expansion, remittances rose by 16.4% annually and 31.3 percent monthly during the month under consideration.

Comparing the first nine months of the fiscal year 2023–24 to the same period previous year, an inflow of US$ 21.0 billion in worker remittances was observed, up from US$ 20.8 billion.

Saudi Arabia (US$703.1 million), the United Arab Emirates (US$548.5 million), the United Kingdom (US$461.5 million), and the United States of America (US$372.5 million) were the top sources of workers’ remittance inflows on March 24.

Business

Problem with SIM blocking: FBR to “move” court against Telcos and PTA

Published

8 hours ago

Farwa

Unless telecom operators block the SIMs of 500,000 non-filers by May 15, FBR is reportedly planning legal action against them.

According to sources, the FBR has conferred with its legal counsel in order to challenge telecom providers, such as PTA, in the Islamabad High Court for failing to abide by directives to disable non-filers’ SIM cards.

Sources also stated that the FBR and Ministry of Finance have decided to take legal action against PTA and telecom providers for failing to carry out the directives to block the SIM cards of non-filers even after more than ten days had passed.

Following a nationwide impasse over the barring of recognized non-filers’ mobile SIMs, the Federal Board of Revenue (FBR) and telecom operators took action.

Tight sources on the matter disclosed that, citing operational and technical challenges, the Cellular Mobile Companies declined to disable the SIM cards of 506,000 taxpayers who had been recognized as non-compliant.

Reportedly, telecom providers argued in a statement that executing FBR’s regulations presents legal challenges.

The Federal Board of Revenue (FBR) called for the authorities to disable the SIM cards of over 506,000 identified non-compliant taxpayers nationwide on April 30, issuing a general income tax order. This is important to note.