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

The World Bank and Pakistan reach consensus on a new partnership framework for reforms.

Published

18 hours ago

Farwa

Meetings between Prime Minister (PM) Shehbaz Sharif and a delegation headed by Martin Raiser, Regional Vice President of the World Bank for South Asia, resulted in the agreement.

Praiseing the World Bank’s role in Pakistan’s growth, Prime Minister Shehbaz welcomed Martin Raiser.

After the floods in Pakistan in 2022, the prime minister expressed gratitude for the Bank’s cooperation in constructing climate-resilient infrastructure. He gave the delegation an overview of the government’s reform programme, which included ending child stunting, improving per acre production in agriculture, reforming the power sector, and digitising the entire tax system.

Martin Raiser expressed appreciation for Pakistan’s determined reform programme and stated that the World Bank was prepared to work with the nation to improve its economy in order to achieve sustainable development.

A new Country cooperation Framework with an annual review mechanism to evaluate progress and guarantee results was reached was agreed upon by both parties to initiate a long-term, targeted cooperation.

In order to accommodate future course corrections, the technique will be flexible. On a chosen list of crucial development goals for Pakistan, the new alliance aims to produce transformative effects over a ten-year period.

Structural economic reforms, including tax policy changes and domestic resource mobilisation, mainly through digitalization, were among the first set of goals that were discussed during the summit.

It was also explored how to improve basic learning and reduce child stunting through human capital development.

Reforms pertaining to the energy sector, such as broadening the role of the private sector in transmission and distribution, and shifting to renewable energy sources to make energy more affordable, environmentally friendly, and financially viable, were also deliberated.

Both sides stressed the need for cooperation in climate adaptation in order to effectively handle the increasing scarcity of water and shocks due to climate change.

Pakistan can gain from the Bank’s experience in leveraging digital transformation, building institutional capacity, mobilising global expertise and best practices, and engaging the private sector through the International Finance Corporation, Multilateral Investment Guarantee Agency, and the World Bank’s private sector arm to enhance economic opportunities, including in the agriculture sector.

The federal and provincial governments, as well as academic institutions, legislators, members of civil society, development partners, and the commercial sector, will all be consulted throughout the establishment of the new Country Partnership Framework, the parties agreed.

In order to discuss partnership priorities that are appropriately aligned with the Government of Pakistan’s strategy and top development priorities, the World Bank will work with relevant stakeholders.

Najy Benhassine, the country representative of the World Bank, and Dr. Kazim Niaz, the secretary of the Economic Affairs division, signed a joint communique in this regard, which the prime minister saw.

Business

Pakistan will “seek” to have a $12 billion loan from friendly nations rolled over.

Published

18 hours ago

Farwa

According to information, Pakistan will require Rs23 billion in foreign funding for the upcoming FY2024–2025. In light of this, Islamabad has apparently chosen to pursue the rollover of a $12 billion loan from friendly nations, such as Saudi Arabia, the United Arab Emirates, and China.

According to information provided by sources inside the finance ministry, rollovers for loans totaling $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the United Arab Emirates would be pursued in order to cover the external funding requirements for the upcoming year.

Budgetary allocations also take into account the new funding from the World Bank, Asian Development Bank, and other financial organisations.

On May 2, it was revealed that the government of Pakistan had made the decision to “finalise” the FY2024–25 budget targets before to the arrival of an IMF team in Islamabad.

Pakistan has scheduled the arrival of the IMF team on May 15th for negotiations on the new loan programme that it is requesting to meet its financial demands.

According to sources, the government hurried budget target preparations prior to the IMF mission’s arrival. The relevant ministries have been instructed by the Ministry of Finance to meet their targets as soon as possible.

Business

Pakistan’s lunar mission ‘ICUBE-Q’ reaches the moon orbit.

Published

2 days ago

Farwa

Pakistan’s lunar mission (ICUBE-Q) entered orbit around the moon on Wednesday.

Pakistan’s historic lunar mission (ICUBE-Q) launched from Hainan, China, on Friday aboard China’s Chang’E6 spacecraft.

According to the IST, the satellite ICUBE-Q was planned and developed in partnership with China’s Shanghai University SJTU and Pakistan’s national space agency SUPARCO.

The ICUBE-Q orbiter is equipped with two optical cameras to image the lunar surface. ICUBE-Q has now been integrated into the Chang’e6 mission after successfully qualifying and testing it.

Chang’e6 is the sixth lunar exploration mission launched by China.

The launch event was streamed live on the IST website and social media platforms. Chang’6, China’s Lunar Mission, will land on the Moon’s far side to collect surface samples before returning to Earth for further research.