Economists revealed that food inflation disturbs everyone especially the poor because they spend higher proportion of their income on food commodities comparatively rich people, mainly in Pakistan. Global food inflation caused food inflation in our country. However, food inflation diffusion has been lower as compared to non food inflation in Pakistan. Food inflation volatility in the country was found to be half of that observed globally.
Presently, Pakistan Bureau of Statistics (PBS) recorded in a current statement that the consumer price index (CPI) inflation General grew by 3.2 percent on year-on-year (YoY) basis during March 2018 as against to a rise of 3.8 percent in the last month and 4.9 percent in March 2017. On monthly basis, it grew by 0.3 percent in March 2018 as against to a fall of 0.3 percent in the last month and rise of 0.8 percent during March 2017. Core inflation measured through non-food non-energy CPI (Core NFNE) grew by 5.8 percent on YoY basis during March 2018 as against to a rise of 5.2 percent in the last month and 5.3 percent in March 2017. On Monthly (MoM) basis, it increased by 0.7percent in March 2018 as compared to increase of 0.2 percent in previous month, and an increase of 0.1 percent in corresponding month of last year i.e. March 2017.
Various research studies also revealed that Pakistan experienced uneven growth pattern throughout its history. The average economic growth during last 45 years is almost 5.5 percent. Furthermore, the Government of Pakistan has been facing various challenges in macroeconomic management like internal and external threats. It is also said that high inflation rate is also considered as an ill for economic growth in the economy of Pakistan because it had recorded high inflation since its independence.
The average inflation rate during last 45 years is approximately 8 percent. One of the significant statement published by the State Bank of Pakistan (SBP) where it has been mentioned that the government predicted growth and consumer price inflation at 6.0 percent for the present FY2018, above from the SBP’s projections of 5 to 6 percent for GDP growth and 4.5 to 5.5 percent for inflation. Since January, it is also said that the Central Bank has adopted a tight monetary strategy to address inflationary risk and widening external imbalances.
Experts, however, predicted inflation to grow in the upcoming months in the wake of rupee depreciation and raising international oil prices. PBS also recorded that the Core inflation in Pakistan, measured by 20 percent weighted trimmed mean CPI (Core Trimmed) grew by 4.1 percent on yearly basis in March 2018 as against to 4.3 percent in the last month and by 4.5 percent during March 2017.
On MoM basis, it grew by 0.2 percent in March 2018 as against to a rise of 0.1 percent in the last month and a rise of 0.2 percent in same month of previous year i.e. March 2017.
Experts also revealed that there are many factors contributing towards food inflation in the country. Our local consumption is growing due to growth in population and per capita income. There is lack of cold storages and proper marketing of perishable goods, therefore, if there is increase in demand or shortage in supply, prices will grow.
A variety of agricultural and non agricultural commodities is traded illegally at Pak-Afghan and Pak-Iran borders which creates substantial monetary loss to the government in terms of public revenues which might be collected in the form of duties and taxes. Statistics showed that the Sensitive Price Index (SPI) inflation on YoY declined by 1.8 percent in March 2018 as against to a rise of 0.5 percent a month earlier and arise of 3.1 percent in March 2017. Since the end of December 2017, the Government of Pakistan has grown local petrol prices by Rs 11 per litre (13.7%) to pass on the impact of high import cost also rupee depreciation (9.5% from December-2017 to March-2018). On MoM basis, it declined by 0.6 percent in March 2018 as against to a fall of 1.2 percent a month earlier and a rise of 1.8 percent in March 2017.
Furthermore, experts of PBS also recorded that the Wholesale Price Index (WPI) inflation on YoY basis grew by 3.6 percent in March 2018 as against to a rise of 4.1 percent a month earlier and an increase of 6.4 percent during March 2017. WPI inflation on MoM basis rose by 0.2 percent in March 2018 as against to a fall of 0.1 percent a month earlier and a rise of 0.7 percent in same month of previous year i.e. March 2017.
Various economists record that Pakistan’s economy is set to surpass previous year’s growth rate, with continued healthy conditions by agriculture sector and even services, and a 4-year record high LSM growth during the first half of FY2018. They also mentioned that the Inflation rate and the fiscal deficit were both contained, whereas revenue growth has outpaced last year’s level.