Pakistanis are spending 34.58 percent of their incomes on food and groceries

Inflation risen to 9.26% in July 2020

According to Pakistan Bureau of Statistics (PBS), Consumer inflation has risen to 9.26 % in July 2020. The rise in fuel and food prices is contributing in the higher inflation. The reason for the jump is high food inflation that occupies more than one-third of the Consumer Price Index (CPI) basket. In June CPI was clocked in at 8.6 percent, while July 2019, the inflation was recorded at 8.38 percent.

The government increased the petroleum prices up to 33%. The hike in the prices of petroleum products mainly contributed towards higher inflation. It seems that the impact of this increase has not been fully incorporated in CPI, yet the food items took the ‘sympathy effect’ of high oil prices and some kitchen items prices skyrocketed, especially wheat flour, sugar, fruits, vegetables and others. At the same time, the government administration’s control over the prices looks much weaker, and even in same market, prices are being charged differently.

In financial year 2020, the average inflation was recorded at 10.74 %, while it peaked to 14.56 % year-on-year in January. The Wholesale Price Index (WPI) on the other hand also started picking up and has increased 5.41% over June 2020 and 3.23 % over corresponding month of last year. In June, WPI declined 0.32 % over July.

The CPI is the main gauge of price changes at the retail level of all goods and services consumed by private households and roughly reflect changes in cost of living of entire Pakistan.

According to CPI basket, on average each Pakistani spends 34.58 % of his income on food and beverages, 23.63 % on house rent, water, gas, electricity, and fuel, 8.6 % on clothing and footwear; 6.92 % on eating out, 5.91 % on transportation, 4.1 % on furnishing and household equipment maintenance, 3.79 % on education, 2.7 % on health, 2.21 % on communication, and 1.59 %, the least of income, on recreation and culture.

Food inflation in July 2020 stood at 17.8 % against 14.57 % in previous month. It was followed by clothing and footwear prices that increased 10.33 %, health charges 7.81 %, furnishing and household equipment maintenance charges 7.79 %, dine-outs 7.53 %, utilities (housing, water, electricity, gas and fuel) 4.16 %, recreation and culture 3.82 %, education 1.08 percent and communication charges increased 0.35 %. However, transportation charges reduced 4.45 % over corresponding month of last year.

The CPI bulletin says that on month-on-month basis, inflation increased 2.5 % in July 2020 as compared to an increase of 0.8 percent in the previous month and an increase of 1.8 % in July 2019.

                                                                     Rukhsana Manzoor Deputy Editor