ISLAMABAD: The annual consumer inflation sported a sign of composure in February, edging down to 12.4 percent, compared to 14.6 percent in January, in line with the market expectation that already factored in effects of stability in food prices and delay in energy tariffs hike.
The Pakistan Bureau of Statistics (PBS) data Monday showed that on month-on-month basis, consumer inflation decreased one percent in February 2020 compared to an increase of two percent in the previous month and an increase of 0.9 percent in February 2019.
Consumer inflation, however, was more than 6.8 percent recorded in February last year. In February, the food group that has almost 35 percent weight in the consumer inflation index saw 18.36 percent jump over the corresponding month a year earlier. There was 1.99 percent decrease in food inflation in February compared to January.
Analysts said the market was expecting a leash being tied to runaway inflation and a subsequent break in the central bank’s hawkish flight.
The State Bank of Pakistan is expected to continue its soft stance in the upcoming policy by end of this month. It left the benchmark interest rate unchanged at 13.25 percent in the previous monetary policy.
The central bank’s governor hinted at reduction in interest rate in case of easing inflation rate.
Mustafa Mustansir, analyst at Karachi-based brokerage Taurus Securities expected downward number because of decline in prices of food items and delay in energy price hikes.
Mustansir said prices of 26 out of 51 items rose on an average, most notably cooking oil, vegetable ghee, bananas, garlic and onions. Elsewhere prices of 10 items declined, most notably tomatoes, eggs, chicken, and liquefied petroleum gas. Prices of 15 items remained unchanged, he said in a report based on sensitive price indicator late last month.
Despite flagging concerns over surge in prices of non-food, analysts foresee consumer inflation within the target range of the State Bank of Pakistan.
“We expect surge in non-food commodity groups, in particular for items which are commercially imported from China or whose raw materials are sourced from China due to trade disruption, following the outbreak of Coronavirus,” he said. “The effect of the latter may exacerbate the general price level in the coming months if the situation prolongs.”
Mustansir said the government is desperately trying to defer rise in energy prices.
The offsetting strike of petroleum levy following a popular oil price cut decision is likely to provoke a counterstrike.
Meanwhile, chairing a meeting on provision of relief to low-income groups, Prime Minister Imran Khan Monday said the government had taken the responsibility of meeting the basic needs of the weak segments of society.
Minister for Planning Asad Umar, Advisor on Finance Dr. Abdul Hafeez Shaikh, Dr. Ishrat Hussain, Dr. Sania Nishtar, former finance minister Shaukat Tareen and other senior officials attended the forum.
It was decided that the federal government and the provinces would help the families, earning less than Rs25,000 per month in purchase of basic commodities, including flour, ghee, sugar and pulses.
Various proposals were present to the prime minister on making more effective the relief to the weak segments of the society.
Dr. Sania Nishtar apprised the prime minister of the progress so far made regarding the country-wide survey afresh on poverty.
The prime minister said taking care of basic needs of poor people was the responsibility of the government adding that the government would take very possible step for their betterment.
He said for provision of basic commodities of life to various segments of the society, the USC network was being exploited so that such people should get flour, ghee, sugar, pulses and other goods easily.
The prime minister directed thorough deliberations on the new proposals so that those doable could be implemented. Making special mention of the network of shelter homes and langar khanas, he said their establishment manifested the government’s resolve to assist the weak segments of the society.
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