Inflation reading comes in at 10.9%

The Consumer Price Index (CPI)-based inflation increased to 10.87% on a year-on-year basis in May 2021, compared to an increase of 11.1% in April 2021 and 8.2% in May 2020, according to data released on Tuesday by the Pakistan Bureau of Statistics (PBS).

According to the monthly review of price indices, on a month-on-month basis, CPI increased by 0.1% in May 2021 compared to an increase of 1.0 percent in the previous month and an increase of 0.3 in May 2020. The monthly figure took the 11MFY21 average inflation to 8.83% year-on-year.

Inflation has remained a thorny issue for the Pakistan Tehreek-e-Insaf (PTI) government that has needed to balance a number of economic issues including rising prices, a stubborn current account deficit, and Pakistan’s first economic contraction in decades.

The government, which is now seeing its fourth finance minister in less than 3 years, has been criticised for not controlling inflation even as growth figures clock in higher than earlier estimates. The inflation reading comes days after the central bank also maintained the discount rate at 7%.

Meanwhile, CPI inflation in rural areas increased by 10.9% year-on-year basis in May 2021 as compared to an increase of 11.3% in the previous month and 9.7% in May 2020. On a month-on-month basis, it decreased by 0.03 percent in May 2021 as compared to an increase of 0.6 percent in the previous month and an increase of 0.3 percent in May 2020.

The Sensitive Price Index (SPI) increased by 19.7 percent year-on-year in May 2021 as compared to an increase of 21.3% a month earlier and an increase of 11% in May 2020. The Wholesale Price Index (WPI) increased by 19.4 percent year-on-year in May 2021 compared to an increase of 16.6% a month earlier and an increase of 1.5% in May 2020.