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KARACHI: Pakistan’s annual consumer price inflation (CPI) increased to 11.1 percent on year-on-year basis in April due to a spike in demand that usually takes place in the Muslim fasting month of Ramadan, said the country’s statistics bureau on Saturday.
The CPI figure stood at 9.1 percent in March.
On month-on-month basis, the inflation increased by one percent in April as compared to an increase of 0.4 percent in the month before and a decrease of 0.8 percent in April 2020, the Pakistan Bureau of Statistics (PBS) data revealed.
The spike in the demand for food items consumed in Ramadan led to the increase in the prices of vegetables, fruits, chicken and meat.
The price of tomatoes increased by 67.70 percent while the rates of other vegetables went up by 29.55 percent.
The PBS statistics also showed an increase of 22.32 percent in fruit prices, 15.81 percent in the rate of potatoes and 2.99 percent in the price of cooking oil.
Traders say the prices of grocery items have witnessed about 30 percent hike during Ramadan due to supply disruptions.
“The demand for food items doubles during the month of Ramadan which exerts pressure on prices,” Abdul Rauf Ibrahim, chairman of the Karachi Wholesale Grocers Association, told Arab News on Saturday.
“The prices have increased by about 30 percent as compared to where they stood last year,” he said, adding that prices in the international market had also gone up amid disruption of supply due to COVID-19.
Economists maintain that the government’s policies are responsible for the inflationary pressure in the economy.
“The major reason for the current price hike is the seasonal impact,” Muzzamil Aslam, a senior economist, commented. “However, the government has also increased inflation by raising electricity rates and increasing the support price of wheat etc.”
Pakistan’s business community says rising inflation has made it difficult for them to maintain cash flows and retain employees.
“The extremely sharp cost-push inflation in recent months has already made it difficult for businessmen to maintain cash flows and retain employees,” Ismail Suttar, president of the Employers’ Federation of Pakistan (EFP), said.
After much political criticism for the prevailing inflationary trend in the country, Prime Minister Imran Khan made changes to his economic team last month by replacing Dr. Abdul Hafeez Shaikh with Shaukat Tarin.
However, economists say they have little hope about the success of the government’s policies for inflation control.
“Pakistan’s economic system is fraught with problems, and no one can bring about a meaningful change overnight,” Aslam said. “There is no effective system in place to check the prices of commodities in the country.”
Meanwhile, financial analysts say the inflation spike in April 2021 was expected due to Ramadan and remains within the range of the central bank’s forecasts.
“The inflation rate in April 2021 is close to the expected rate of around 10.9 percent to 11 percent,” Samiullah Tariq, head of research at the Pakistan-Kuwait Investment, said. “This was expected due to Ramadan. Things will normalize from July onwards.”
The State Bank of Pakistan expects that inflation during the current fiscal year will remain within the range of seven to nine percent.