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With improved checks on food, fuel prices, inflation eases to 9.7% in June

June inflation drops to 9.7% YoY, compared to 10.9% in May
Food and fuel price spikes were contained, contributing to easing pressure on prices
Prices of non-perishables seen to be increasing

ISLAMABAD: Consumer inflation dropped to 9.7% in the month of June due to improved checks in the prices of food and fuel, according to official data released on Thursday. 

On an annual basis, inflation based on the Consumer Price Index (CPI) was recorded at 8.9% for the recently concluded 2021 fiscal year, compared to 10.74% in fiscal 2020 and 6.8% in fiscal 2019 (the first year of the PTI government). 

To illustrate the stress this has put on citizens’ pockets, a good that cost Rs100 when the PTI government took over costed (on average) Rs106.8 by the end of its first year, Rs118.27 by the end of its second year and now costs Rs128.80. 

The Pakistan Bureau of Statistics (PBS) said CPI inflation decreased 0.2 percent month-on-month in June 2021 compared to an increase of 0.1 percent in the previous month and an increase of 0.8 percent in June 2020.

While prices of non-perishable foods were seen increasing, prices of perishable foods came down year-on-year and month-on-month.

Meanwhile, the State Bank of Pakistan (SBP) has maintained its inflation estimate for FY2021 in the 7-9% range. It expects inflation to gradually fall to 5-7% over the medium-term. 

The SBP has kept its policy rate unchanged at 7% since June last year.

The SBP expects the benchmark interest rate to be kept at 7% in the near term, and has said any adjustments to the benchmark rate are to be measured and gradual to achieve mildly positive real interest rates over time.

Analysts are awaiting next interest rate move of the central bank when it meets in July.

Meanwhile, YoY CPI Urban inflation was recorded at 9.7% in June as compared to 10.8% in the previous month and 7.6% in June 2020. 

On a month-on-month basis, it decreased 0.4% in June as compared to an increase of 0.2% in the previous month and an increase of 0.7% in June 2020.

Likewise, YoY CPI Rural inflation was recorded at 9.7% in June as compared to 10.9% in the previous month and 10% in June 2020. 

On a month-on-month basis, it decreased 0.1% in June 2021 as compared to a decrease of 0.03% in the previous month and an increase of 1.0% in June 2020.

Ahmed Mukhtar Naqshbandi

Media person and communication expert for over 25 years. Worked with Dow Jones News, World Bank, CNBC Pakistan, Aaj TV, ARY TV, Abbtakk TV, Business Recorder, Pakistan Observer, Online News Network, TTI Magazine and other local and world Publications.

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