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Inflation clocks in at 13.8% in May

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  • 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.

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Tajir Dost app: traders don’t seem interested in registering

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To tax retailers in Pakistan, the Tajir Dost app was released. The sources stated that the government hopes to tax 3.5 million merchants through the app.

Ajmal Baloch, the president of All-Pakistan Anjuman-e-Tajran, stated that he made reservations with FBR on the SRO within a week.

The Federal Board of Revenue (FBR), according to him, cannot be a “Tajir Dost” because of its unethical actions.

Baloch believed that since electricity bills allow traders to pay a predetermined advance income tax, further taxes are unnecessary.

The trader, according to him, is already paying thirteen different kinds of taxes on the commercial meter. “A trader already pays between Rs. 15,000 and Rs. 20,000 in taxes annually, but you are requesting Rs. 1,200 per month in taxes.”

Mr. Ajmal summoned representatives of the Federal Board of Revenue (FBR) to a meeting with the trade associations to talk about the indirect taxes that the merchants are paying.

Additionally, he claimed that FBR officers are charging the traders, the majority of whom are less educated, “monthly charges.”

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Donald Lu visits Finance Minister Aurangzeb at the World Bank headquarters.

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Wednesday saw Minister for Finance and Revenue Muhammad Aurangzeb meet US Assistant Secretary of State for South and Central Asian Affairs Donald Lu and Principal Deputy Assistant Secretary Elizabeth Horst.

The finance minister briefed US officials on Pakistan’s reform plan at the World Bank. Meeting both delegations decided to improve bilateral ties.

Meeting topics included alternative energy, agriculture, climate, and tech industry. Boosting the Pakistan-US economic partnership was another finance ministry priority.

With US officials, Pakistan’s Finance Minister Muhammad Aurangzeb addressed IT, agriculture, and other business potential.

Pakistan would collaborate with the US International Development Finance Corporation and Exim Bank, according to Muhammad Aurangzeb.

His name is Donald Lu.
Over 30 years of US government service for Lu as a foreign service officer.

What Pakistan calls the “cipher” dispute involves the American official. The Pakistan Tehreek-e-Insaf (PTI) founder claimed that a supposed official letter between Washington and Islamabad proved his ousting as PM was a US conspiracy.

Washington has strongly refuted Khan’s allegations.

The State Department’s top South and Central Asia diplomat is Donald Lu, assistant secretary of state.

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Huge investment potential exists in the telecom and IT sectors. Shaza Fatima

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According to Shaza Fatima Khawaja, Minister of State for IT and Telecommunication, there are numerous investment prospects in Pakistan’s IT and telecom sectors.

She noted that the current administration is dedicated to fostering foreign investment in the nation, in line with the Prime Minister’s goal.

According to a news release, CEOs Wateen Adil Rashid and Muhammad Shahbaz Khan of Taavun (Pvt) Limited, who paid her a visit on Tuesday, spoke with Minister of State for IT and Telecommunication Shaza Fatima Khawaja.

She declared that the private sector would receive complete support because it is essential to growing our exports.

Regarding youngsters, she stated that they are our greatest asset and that efforts are being made to further their growth.

Sheikh Nahyan bin Mubarak Al Nahyan of the United Arab Emirates was thanked by Shaza Fatima for his particular interest in promoting additional investment in Pakistan’s telecom industry.

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