Inflation rate rises to 9.3% in July

Additionally, the government has substantially increased the prices of petroleum products, causing an increase in non-food inflation.

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The prices of essential food items across the country surged in July following a drop in production and increased petroleum prices.

The Consumer Price Index (CPI) placed monthly inflation as increased to 9.3% on a Year-on-Year (YoY) basis in July 2020, from 8.6% during June 2020, according to data released by The Pakistan Bureau of Statistics (PBS) on Monday.

The outbreak of the coronavirus has weakened consumer demand putting downward pressure on commodity prices. Nevertheless, risks of supply disruptions and the lower production of sugar and wheat have contributed towards a surge in food inflation in the last few months.

Additionally, the government has substantially increased the prices of petroleum products, causing an increase in non-food inflation.

Food inflation currently stands in double-digits and posts an increase in July 2020. In urban areas, it surged by 15.1% in July on a YoY basis and 3% on an MoM basis.
Likewise, food inflation in rural areas rose by 17.8% in July 2020 on a YoY basis and 4% on an MoM basis.

People buying vegetables in Empress Market, Saddar, Karachi. (Shahab Nafees/DAWN)

According to The PBS, inflation placed on the CPI surged in the first month of the new fiscal year. This was mainly because of a vast increase in the domestic prices of petroleum products followed by the surge in prices of wheat, vegetables, and other eatables.

In July 2019, the price levels increased by 8.4%. According to the PBS data, the price of wheat went up by 28.5% in July 2020 compared to June 2020.

Similarly, the cost of wheat flour increased by 18.5%, and the price of wheat products increased by 16% compared to June 2020.

An increase of 17% was also noted in the retail price of sugar across Pakistan during the month under review.

The average CPI inflation between July-June FY20 rose to 10.74%, which is the highest since the fiscal year 2011-12 when it stood at 11.01%.

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