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Tag: inflation

  • Food inflation not linked to urea prices

    Food inflation not linked to urea prices

    KARACHI: The fertilizer industry is playing a critical role in ensuring food security and managing food inflation in Pakistan through adequate and affordable supply of urea at one fifth the international prices. 

    In a media briefing on Wednesday, Imran Ahmed, CFO of Engro Fertilizers, highlighted that food inflation is one of the biggest challenges being confronted by the Government. However, food inflation is not unique to Pakistan as global food prices have jumped by 34 percent between July 2020 and June 2021, owing to a surge in oil prices, supply chain disruptions and unfavorable weather conditions. Reports suggest that globally the food prices have soared to its highest point in a decade and that has translated locally, where the prices have even been adversely impacted by rupee devaluation on top of global price increases.

    He stressed that urea prices do not have any impact on food inflation as only 2.6 per cent of farmers wallet is spent on urea. According to calculations, every Rs 50/bag increase in urea price has an impact of only 1 paisa on the price of a ‘roti’. The impact of a Rs 50/bag increase in urea price on other agri commodities like rice, sugar, maize, potato, tomato and banana is all within 10 paisas per KG.

    The local fertilizer industry has shielded farmers from a steep rise in international urea prices as domestically produced urea is currently priced at 2012 level. Urea is available in Pakistan at a significant discount of 81 percent, equivalent to Rs 7500/bag, compared to the international rates. As a result, farmers are getting an annualized benefit in excess of Rs 350 billion and the country is expected to save $3 billion in import substitution during 2021.

    He commended the PTI Government for its vision to transform the agriculture sector of Pakistan and supportive policies that enabled the fertilizer sector to reduce urea prices by Rs 400/bag last year. Imran declared that in the absence of a strong local fertilizer industry, Pakistan would have faced at best massive urea shortages like India where landed urea imports are costing as much as $1000 / ton, or even more dire an all-out food emergency as currently being experienced in Sri Lanka.

    Imran pointed out that the real issue being faced by the local farmers is the global hike in DAP prices by over 100 per cent that has reflected locally as well as majority of DAP demand is met through imports. To promote balanced mix of fertilizers for higher crop productivity, the Government must urgently provide the farmers relief by implementing the much-promised DAP subsidy. Currently, the subsidy on DAP is being extended only by the Government of Punjab. The Federal Government should convince and mobilize other provincial governments to immediately allocate funding for phosphatic fertilizer subsid for Rabi 2021-22.

    It has been widely recommended by the farming community that the Government should increase the subsidy amount to Rs 2,000/bag in view of the current prices of DAP. Further, the subsidy should not be restricted to number of bags, but instead be based on land holding and recommended dose for the farmers.

    For the now commenced Rabi season, the Government has very prudently agreed to proceed with disbursement of the subsidy through the usual method of stickers/vouchers. The Government is to be recognized for its adaptability realizing that given the longer than expected duration for the complete roll out of the Kissan Card system, the proven voucher process should be continued for providing timely relief to farmers. The multi-featured Kissan Card is expected to be fully implemented and scaled up by the next season.

    Engro Corp posts 23% revenue growth in nine months
  • August inflation increases by 8.4%

    August inflation increases by 8.4%

    KARACHI: The Consumer Price Index (CPI) has increased by 8.4 per cent on year-on-year (YoY) basis in August 2021 as compared to an increase of 8.4 per cent in the previous month and 8.2 per cent in August 2020.

    The Pakistan Bureau of Statistics (PBS) on Wednesday said that on month-on-month basis, it increased by 0.6 per cent in August 2021 as compared to increase of 1.3 per cent in the previous month and an increase of 0.6 per cent in August 2020.

    CPI inflation Urban, increased by 8.3 per cent on year-on-year basis in August 2021 as compared to an increase of 8.7 per cent in the previous month and 7.1 per cent in August 2020. On month-on-month basis, it increased by 0.5 per cent in August 2021 as compared to increase of 1.29 per cent in the previous month and an increase of 0.8 per cent in August 2020.

    CPI inflation Rural, increased by 8.4 per cent on year-on-year basis in August 2021 as compared to an increase of 8.0 per cent in the previous month and 9.9 per cent in August 2020. On month-on-month basis, it increased by 0.7 per cent in August 2021 as compared to increase of 1.4 per cent in the previous month and an increase of 0.4 per cent in August 2020.

    Senstive Price Indicator (SPI) inflation on YoY increased by 15.9 per cent in August 2021 as compared to an increase of 16.2 per cent a month earlier and an increase of 11.7 per cent in August 2020.

    On MoM basis, it increased by 0.7 per cent in August 2021 as compared to increase of 1.8 per cent a month earlier and an increase of 0.9 per cent in August 2020.

    Wholesale Price Index (WPI) inflation on YoY basis increased by 17.1 per cent in August 2021 as compared to an increase of 17.3 per cent a month earlier and an increase of 3.3 per cent in August 2020. WPI inflation on MoM basis increased by 1.2 per cent in August 2021 as compared to an increase of 2.3 per cent a month earlier and an increase of 1.3 per cent in corresponding month i.e. August 2020.

    Headline inflation increases by 8.4% in July
  • SBP projects GDP growth in range of 1.5-2.5 percent with high consumer prices in FY21

    SBP projects GDP growth in range of 1.5-2.5 percent with high consumer prices in FY21

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday projected GDP growth in the range of 1.5-2.5 percent with higher than targeted consumer prices for the current fiscal year FY21 (2020/2021).

    The real GDP recorded 0.4 percent negative growth during the last fiscal year 2019/2020.

    According to First Quarterly Report on the State of Pakistan’s Economy, the SBP projected the real GDP in the range of 1.5 to 2.5 percent in fiscal year 2020/2021 on the basis of current trends of economic activity.

    “However, downside risk to this projection includes the second wave of COVID, which has swept across many countries and, in Pakistan’s case, gained momentum in November 2020. Supply-side shocks from uncertain weather conditions cannot be ruled out either,” the SBP said.

    However, at the same time, there are also potential upsides. These include the development and distribution of an effective vaccine and its possible early availability, the SBP added.

    The SBP projected average Consumer Price Index (CPI) in the range of 7.0-9.0 percent higher than target set by the government at 6.5 percent.

    The inflation rose by 10.7 percent during the last fiscal year 2019/2020.

    The SBP said that the government’s handling of the current surge in Covid infections includes keeping of business activities running under standard operating procedures (SOPs), thereby supporting economic activity and employment.

    The restrictions are focused more on reduced public gatherings, provisions for staff to work from home, and temporary closure of educational institutes.

    Nonetheless, the overall growth outcome hinges on how the Covid infections and the associated government response evolve.

    The outlook for the external sector has improved since the previous set of projections published in SBP’s FY20 Annual Report.

    The current account deficit is now projected to be in the range of 0.5-1.5 percent of GDP (earlier: 1.0 to 2.0 percent of GDP).

    The revision is mainly due to an upward adjustment in workers’ remittances, which are now expected to be in US$ 24.0-25.0 billion (earlier: US$ 22.0-23.0 billion).

    However, projections of workers’ remittances are subject to risk from the outlook for the oil-exporting GCC economies, whose fiscal balances might deteriorate further with the escalation in global Covid infections.

    This may translate into a sizable reduction in their demand for foreign workers, leading to lower remittance inflows to Pakistan.

    The outlook of exports and imports largely remains unchanged from their earlier assessment. The greater quantum of high value added textiles and food commodities – especially rice – are expected to generate above target growth in exports. That said, the key downside risk to this outlook stems from the resurgence of Covid in major export destinations of Pakistan, which has the potential to suppress demand.

    On the upside, the incentives given in the industrial support package since early November 2020 may help the textile sector exports perform better. Similarly, imports are projected to surpass their annual target.

    The increase in food imports and domestic economic activity is mainly expected to drive import growth. That said, the increase in global Covid infections and associated further decline in crude oil price could lower import payments.

    As for the fiscal deficit, the latest projections suggest that it remains on track to meet the annual target of 7.0 percent of GDP. Going forward, the fiscal situation would continue to depend on the domestic evolution of Covid.

    The upside risks mainly stem from: (a) the health fallout, and (b) the potential economic fall-out, in case of protracted or intensified lockdowns in the remainder of FY21. By contrast, faster than anticipated economic revival, which gives the government room to generate more revenues, either by rolling back certain tax concessions or imposing fresh levies, could contain the deficit further.

    Regarding the inflation outlook, the SBP projects average inflation in FY21 to remain in the 7.0 – 9.0 percent range. It is important to highlight that food inflation, triggered by supply side factors, has been driving up headline inflation recently.

    Meanwhile, core inflation has been relatively moderate, owing to benign cost and demand factors. Given the spare capacity in the industrial sector, high base effect, and actions being taken to correct the supply side issues in the food market, upside risks to the inflation outlook are largely contained.

    The latest SBP surveys also reflect well-anchored inflation expectations of both businesses and consumers.

  • Inflation is one of main challenges: finance ministry

    Inflation is one of main challenges: finance ministry

    ISLAMABAD: The ministry of finance has said that economic growth is showing persistent recovery but the inflation is one of the main challenges.

    According to monthly economic update issued on Tuesday, the finance ministry said that economic growth is showing persistent recovery in first quarter (July – September) 2020/2021.

    In absence of any adverse future shocks, the economy is on its way not only to rebound from the pandemic related crises, but also to record a reasonable growth rate for the full fiscal year.

    “Presently, inflation is one of the main challenges. However, the government is taking all possible measures to control it,” it said.

    Together with measures that ensure sufficient supply of goods, especially food related production, it is expected that inflation will remain under control whereas policy measures will contribute to better functioning markets.

    Most importantly, although domestic economic activity is expected to recover, still the risk of pandemic attack persists if the SoPs are not fully followed.

    “Thus, Pakistan’s near-term economic prospects are promising subject to reducing uncertainty and restoring business confidence,” the ministry added.

    Usually main drivers of the consumer price index (CPI) are international commodity prices, especially food and oil products, the exchange rate, growth of broad money and the policy interest rate.

    “However, in Pakistan most recently, CPI remained driven by higher food prices, while non-food inflation remained moderated,” the ministry added.

    Supply disruption in food related commodities was mainly due to extended monsoon season which has built inflationary pressure.

    In recent weeks, the international food prices have rebounded somewhat, whereas oil prices declined and the Pak Rupee exchange rate slightly appreciated against the USD, thus easing out inflationary prospects.

    There is no change in Indirect tax or other fiscal measures. Likewise, interest rate is kept same as per the policy interest rate in July 2020.

    “Thus, accommodative Fiscal and Monetary Policy helped in controlling core inflation. The government is making all efforts to control inflation by smoothing supply even by expediting imports of sugar and wheat, which are considered as essential food commodities.

    On weekly basis, impact can be predicted from decline of 0.23 percent in SPI on 22nd October 2020. This decline occurred after seven weeks.

    On the basis of current economic scenario, headline inflation is expected to remain within a range of 7.3 to 9.3 percent in October 2020.

    Economic recovery has been observed from the start of the new fiscal year.

    Most importantly the decrease in number of Corona virus cases and the resumption of economic activities have contributed in dampening the negative impact of health crisis on the economy.

    Economic recovery was seen in Q1 FY2021 and it is expected that this trend will continue but fears and risk factors are appearing due to the possible second wave of COVID, the ministry said.

  • Headline inflation growth slows in February 2020

    Headline inflation growth slows in February 2020

    ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) has contracted at 12.4 percent in February 2020 as compared with 14.6 percent in January 2020.

    According Pakistan Bureau of Statistics (PBS), the headline inflation base-year 2015-16 increased by 12.4 percent on year-on-year basis in February2020 as compared to an increase of14.6 percent in the previous month and 6.8 percent in February2019.

    On month-on-month basis, it decreased by 1.0 percent in February 2020 as compared to an increase of 2.0 percent in the previous month and an increase of 0.9 percent in February2019.2.

    The CPI inflation Urban increased by 11.2 percent on year-on-year basis in February2020 as compared to an increase of 13.4 percent in the previous month and 7.2 percent in February 2019.

    On month-on-month basis, it decreased by 1.1 percent in February 2020 as compared to an increase of 1.7 percent in the previous month and an increase of 0.9 percent in February2019.

    CPI inflation Rural increased by 14.2 percent on year-on-year basis in February 2020 as compared to an increase of 16.3 percent in the previous month and 6.0 percent in February 2019.

    On month-on-month basis, it decreased by 1.0 percent in February 2020 as compared to an increase of 2.4 percent in the previous month and an increase of 0.9 percent in February2019.

    SPI inflation on YoY increased by14.5 percent in February2020 as compared to an increase of 18.3 percent a month earlier and an increase of 7.2 percent in February2019.

    On MoM basis, it decreased by 0.8 percent in February2020 as compared to an increase of 0.5 percent a month earlier and an increase of 2.4 percent in February2019.

    WPI inflation on YoY basis increased by 12.6 percent in February2020as compared to an increase of 15.4 percent a month earlier and an increase of 13.9 percent in February2019.

    WPI inflation on MoM basis it decreased by 0.8 percent in February 2020 as compared to an increase of 1.8 percent a month earlier and an increase of 1.6 percent in corresponding month of last year i.e. February 2019.

  • PBS rules out fudging in inflation figures

    PBS rules out fudging in inflation figures

    ISLAMABAD – The Pakistan Bureau of Statistics (PBS) categorically rejected allegations of fudging in inflation figures, addressing concerns raised in some sections of the electronic and print media.

    (more…)
  • Sensitive price inflation increases by 17.58pc

    Sensitive price inflation increases by 17.58pc

    KARACHI: The prices of essential items have registered 17.58 percent increase by week ended February 06, 2020 when compared with corresponding week last year, according to data released by Pakistan Bureau of Statistics (PBS).

    According to the data the combined Sensitive Price Indicator (SPI) increased by 17.58 percent by week ended February 06, 2020 as compared with the week ended February 07, 2019.

    As per the data the highest inflation for the period under review was recorded at 19.99 percent for the expenditure group ranging between Rs22.889 and Rs29.517.

    While the SPI was recorded at 16.18 percent for the period for expenditure group up to Rs17,732.

    The PBS computes the weekly SPI with base 2015-16= 100 covering 17 urban centers and 51 essential items for all expenditure groups.

  • Finance ministry hopes ease in inflation in coming days

    Finance ministry hopes ease in inflation in coming days

    ISLAMABAD: Ministry of Finance has said that the outcome of stabilization policies, agriculture sector interventions, rigorous monitoring at federal/provincial levels, and favorable weather will bring better results in easing out inflation and sustaining the economy towards growth and productivity in the coming days.

    Adverse effects of pre-monsoon rains on the wheat crop, disruption of the supply chain of essential items due to harsh winters and thick fog, delay in harvest and arrival of the crop in the market, and lower production of vegetables, including tomato in Sindh, led to higher food inflation but the change of weather and better supply of potatoes, tomatoes and onions should result in smooth supply and decrease price pressure, says the Finance Division in an official statement on Monday.

    The Finance Division noted that another factor contributing to higher inflation was the global price impact due to international commodity prices like Palm oil increased by 43.9 percent, Soybean oil by 12.8 percent, Crude oil by 16.6 percent, etc December 2019 over December 2018 also pushed up the domestic prices. A downward trajectory in crude oil in the market will result in a downward pattern in domestic prices in the coming months.

    While the factors above are likely to ease the inflation, the government has also taken several relief measures to protect the vulnerable from the price-hike. These measures include the provision of subsidy to Utility Stores Corporation on 05 essential items for which Rs. 7 billion has been transferred to Ministry of Industries and Production; Rs. 226.5 billion allocated in the budget, Rs. 141 billion already released so far, for low-end consumers using less than 300 units of electricity in a month; PM’s Ehsaas program with doubled social safety net allocation of Rs.190bn from 100bn; out of Rs. 24 billion allocated for a gas subsidy, Rs. 12 billion have so far been released; and Rs. 1000 per family given to 5.1 million families as a special transfer in August 2019.

    Similarly, Rs. 5,000 quarterly tranche was paid to 4.3 million poor families in December 2019; Under Kifalat monthly stipends of Rs. 2,000 per month to 4.5 million families for consumption smoothing starting from 1st February 2020; 1 million new beneficiaries to be added to Kifalat in the next five months with a monthly transfer of Rs. 2,000; undergraduate scholarships to cover the cost of tuition fees and other expenses at the university for 50,000 needy students; Rs. 750 for boys and Rs. 1,000 for girls quarterly stipends to primary school-going children three million children covered; record allocation Rs.152 bn for merged FATA districts; and reduced GST on LPG to 10 percent from 17 percent.

    The Ministry of Finance said the government had also devised a strategy to control and ease out the impact of inflation through a host of policy measures which included ECC permission for import of 0.3 million tons of wheat to decrease the local wheat price and meet the domestic requirement; Zero borrowing by Govt from SBP in Current FY.

    Government retired Rs. 837.2 billion (1st July-17th January 2020) compared to the borrowing of Rs. 3770.5 billion same periods last year; Reduction in fiscal deficit, primary surplus H1FY 20; monetary tightening and demand compression by austerity; complete restriction on supplementary grants; prices monitoring Cell in Ministry of National Food Security & Research to check price hikes of essential food items; network of Sasta Bazaars and Utility Store outlets is being expanded for provision of essential items; cheaper Roti provided with a subsidy of Rs.1.5 bn for public tandoors; provincial governments monitoring the display of price list and quality of items in the open market and Sasta Bazaars; and 10) effective measures being taken by the CCP to control Cartelization and undue Profiteering

  • 46 essential consumer items out of 51 register price hike in one year; prices go up to 116.82%

    46 essential consumer items out of 51 register price hike in one year; prices go up to 116.82%

    ISLAMABAD: About 46 essential consumer items out of 51 have registered increase in prices during past one year showing the inflationary pressure on the masses.

    The inflation data based on Sensitive Price Indicator (SPI) released by Pakistan Bureau of Statistics (PBS) for the week ended January 01, 2020.

    The PBS calculates the weekly SPI with base 2015-16=100 covering 17 urban centres and 51 essential items for all expenditure groups/quintiles and combined.

    The following is the comparison of price increase for the period between January 23, 2020 and January 24, 2019:

    01. Onions: 116.82 percent

    02. Potatoes: 111.15 percent

    03. Pulse Moong (Washed): 88.52 percent

    04. Garlic (Lehsun) 1 Kg: 65.43 percent

    05. Tomatoes: 56.91 percent

    06. Pulse Mash (Washed): 50.9 percent

    07. Gur (Average Quality): 43.26 percent

    08. Chicken Farm Broiler (Live): 41.73 percent

    09. Cigarettes Capstan 20’S Packet: 36.81 percent

    10. Sugar Refined: 31.95 percent

    11. Long Cloth 57″ Gul Ahmed/Al Karam: 31.3 percent

    12. Pulse Gram: 30.2 percent

    13. Lawn Printed Gul Ahmed/Al Karam: 28.52 percent

    14. Petrol Super: 27.88 percent

    15. Vegetable Ghee DALDA/HABIB or Other superior Quality 1 kg Pouch: 24.87 percent

    16. Pulse Masoor (Washed): 22.92 percent

    17. Wheat Flour Bag 20 Kg: 21.16 percent

    18. Cooked Beef at Average Hotel: 20.26 percent

    19. Hi-Speed Diesel: 19.18 percent

    20. LPG 11.67 kg Cylinder: 18.87 percent

    21. Cooking Oil DALDA or Other Similar Brand (SN), 5 Litre Tin: 17.98 percent

    22. Vegetable Ghee DALDA/HABIB 2.5 kg Tin: 16.8 percent

    23. Tea Prepared Ordinary: 16.6 percent

    24. Shirting (Average Quality): 16.46 percent

    25. Powdered Milk NIDO 390 gm Polybag: 16.29 percent

    26. Cooked Daal at Average Hotel: 16.27 percent

    27. Bananas (Kela) Local: 15.51 percent

    28. Mustard Oil (Average Quality): 15.38 percent

    29. Sufi Washing Soap: 14.61 percent

    30. Bread plain (Small Size): 12.39 percent

    31. Georgette (Average Quality): 11.85 percent

    32. Rice IRRI-6/9 (Sindh/Punjab): 11.38 percent

    33. Toilet Soap LIFEBUOY 115 gm: 11.14 percent

    34. Eggs Hen (Farm): 10.4 percent

    35. Mutton (Average Quality): 10.3 percent

    36. Tea Lipton Yellow Label 190 gm Packet: 10.29 percent

    37. Electricity Charges for Q1: 10.26 percent

    38. Beef with Bone (Average Quality): 9.79 percent

    39. Milk fresh (Un-boiled): 9.19 percent

    40. Match Box: 8.47 percent

    41. Energy Saver Philips 14 Watt: 8.37 percent

    42. Firewood Whole 40 Kg: 7.08 percent

    43. Rice Basmati Broken (Average Quality) 1 Kg: 6.6 percent

    44. Curd (Dahi) Loose: 6.49 percent

    45. Chilies Powder NATIONAL 200 gm Packet: 3.98 percent

    46. Salt Powdered (NATIONAL/SHAN) 800 gm Packet: 0.91 percent

    47. Gents Sandal Bata: 0 percent

    48. Gents Sponge Chappal Bata: 0 percent

    49. Ladies Sandal Bata: 0 percent

    50. Gas Charges upto 3.3719 MMBTU: 0 percent

    51. Telephone Call Charges: 0 percent

  • Policy rate likely unchanged on high inflation

    Policy rate likely unchanged on high inflation

    KARACHI: The State Bank of Pakistan (SBP) is likely to keep the policy rate unchanged due to the recent surge in inflation, analysts said on Thursday.

    Analysts at Arif Habib Limited expect inflation to remain elevated in upcoming months on account of regular adjustment in electricity price (fuel cost adjustment and base tariff hike), another round of gas price increase, increase in prices of petroleum products, and continuous surge in prices of perishable and non-perishable food items.

    On the monetary policy front, they maintain a status quo stance on the upcoming Monetary Policy Statement (MPS) scheduled on 28th Jan’20, with no change expected in interest rate (policy rate to be maintained at 13.25%) as they believe the surge in inflation is due to supply disruptions of key commodities and this might settle down in coming months. We expect inflation to start declining from March 2020 to 11.5% due to the high base effect. After considering forecasted inflation, we expect rate cuts to begin from March 2020.

    They expect January 2020 inflation to settle at 13.58% YoY compared to 5.6% in Jan’19 and 12.63% in December 19, respectively.

    The YoY uptick in CPI is expected on the back of i) increase in prices of non-perishable products including Pulse Moong, Chicken, Pulse Gram, Eggs, Gur and Wheat Flour, ii) increase expected in quarterly house rent index by 1.5%, and iii) increase in prices of petroleum products.

    Whereas a decline in prices of perishable items is expected to keep the inflation restrained. This will take the 7MFY20 average inflation to 11.46% compared to 5.9% in 7MFY19. On a yearly basis, an increase in inflation will likely be led by Food (+21% YoY), Transport (+15.4%YoY), Alcoholic Beverages & Tobacco (+14.6% YoY), and House Hold Equipment (+12.9%).

    On a MoM basis, CPI reading is expected to increase by 1.20% attributable to surge in House Hold Equipment index (+2.4% MoM), Housing Index (+1.7% MoM), Food index (+1.4% MoM) and Transport Index (+1.4% MoM).

    As per three weeks Sensitive Price Index (SPI) data published by the Pakistan Bureau of Statistics (PBS), average prices of Pulse Moong, Chicken, Pulse Gram, Eggs, Gur and Wheat Flour are expected to register a jump of 15%, 13%, 13%, 11%, 8% and 5% MoM, respectively.

    On the other hand, meagre decline in prices of essential food items like Onions (-15% MoM), and Tomatoes (-5% MoM) are expected to keep the food index contained.