ISLAMABAD: The average inflation for the fiscal year 2021/2022 has been estimated up to 12 per cent as against the target of 8 per cent, according to Economic Survey of Pakistan released on Thursday.
The survey said that the rising input costs on the back of high utility prices and the lagged impact of exchange rate depreciation likely to maintain upward pressure on inflation in the following month of outgoing fiscal year.
There is significant uncertainty around the outlook for international commodity prices as well which had been exacerbated by the Russia- Ukraine conflict.
The impact will be more visible in non-food prices, while the food prices are likely to remain stable due to effective monitoring of prices and smooth supply of essential items by the federal and provincial governments.
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“As a result of these developments, average inflation forecasts have been revised upwards and will remain 11.5-12.0 percent in FY2022,” the survey said.
For the outgoing fiscal year, the inflation target was set at 8.0 percent, but abnormal increase in global commodity prices especially crude oil and the edible oil has soared the domestic prices since Pakistan is net importer of these essential items.
It is the 6th consecutive month when inflation rate has remained in double digit. Consumer Price Index (CPI) in April 2022 stood at 13.4 percent on a year-on-year (YoY) basis which was up from 12.7 percent in the previous month and 11.1 percent in April 2021. The pace of food inflation surged 15.6 percent in Urban and 17.7 percent in Rural during the month of April 2022. The CPI Inflation, recorded at 11.0 percent on average during July-April FY2022 as against 8.6 percent in same period last year.
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The pressures on headline inflation during the period can be attributed to adjustment in prices of electricity and gas, a significant increase in the non-perishable food prices, exchange rate depreciation along with rapid increase in global fuel and commodity prices.
The drivers of global price hike highlight that demand for goods was already strong but supply side limitations due to global logistics (transportation congestion) constraints added stress to already swelling prices. It is also recorded that the Wholesale Price Index (WPI) continued its upward trajectory, indicating persistent cost push inflationary pressure in the economy.
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The government made best efforts to ensure smooth supply of essential domestic goods through vigilant monitoring of prices both at provincial and federal level. A Ramazan package of Rs 8.2 billion was provided through Utility Store Corporation (USC) for providing essential items to general public at affordable prices. Government has already approved import of three million metric tonnes of wheat to ease the supply in the country.
Further, continuous relief to the lower strata of the society from global inflationary pressure, the ECC granted approval to revise prices of wheat flour and sugar from Rs 950/20kg to Rs 800/20kg and Rs 85/kg to Rs 70/kg, respectively, and also directed that discount of Rs 190/kg on vegetable ghee will be continued. The government will continue to absorb the cost of subsidy for the benefit of the common man.
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