April inflation

According to the Pakistan Bureau of Statistics (PBS), the year-on-year Consumer Price Index (CPI) in April rose to 4.8 percent and witnessed an increase of 1.4 percent in April 2017 compared to March 2017. In addition, CPI of the corresponding period of the year before was 4.09 percent (July-April 2016 over July-April 2015). The 4.84 percent CPI, surprisingly, is 1.16 percent lower than what was projected in the budget for the current fiscal year which had projected inflation at 6 percent - surprising because typically governments understate inflation instead of overstating it at the start of the year. However, it is higher by 0.54 percent than what was projected for the fiscal year during the Article IV consultations with the International Monetary Fund (IMF) held in Dubai between 28th March and 5th April 2017 which on its website stated that: "average headline inflation is expected to be contained at 4.3 percent."
Some observations about the PBS data are in order. First, food and non-alcoholic beverages with a weight of 34.9 percent rose by 1.40 percent in April over March 2017 with perishables accounting for a rise of 9.72 percent and non-perishables 0.46 percent. Perishable items operate within perfect competition where price is set through demand and supply and a rise in price can be dismissed as a poor crop yield, however, perishable items account for only 4.99 percent weightage while non-perishable food items, many of which do not operate under free market conditions, account for 29.84 weightage. Non-perishable products include sugar, jam (locally manufactured), and tea, vegetable ghee, cooking oil (imported) which incidentally are more attractive with the rupee overvalued and while it understates the rate of inflation it accounts for a rising trade deficit.
Secondly, transport accounting for 7.2 percent weightage rose by 0.36 percent, no doubt due to the heavy reliance on petroleum and products as a revenue source - up to around 42 percent of total tax collected in this country is generated from petroleum and products. Thirdly, education inflation rose by 6.5 percent in one month (from March to April this year) which is understandable given that fees are raised at the start of the new education year. And finally, recreation and culture witnessed a decrease in price of 0.57 percent, and one wonders what items in this category actually declined in price.
PBS, under the administrative control of the Ministry of Finance, has been criticised during the tenure of previous governments as well as the incumbent for data manipulation with the objective of showing a better performance than is in fact the case. Be that as it may, when data manipulation reaches levels which are openly challenged because of failure to rationalize statistics released by other government departments as well as credible industry sources, the clamour for a meeting with PBS staff to explain and clarify rises. In this context, it is relevant to note that during the traditional post-budget press conference in June 2014 by the Minister of Finance Ishaq Dar, journalists not only challenged the data presented in the budget but also clamoured for a discussion with the PBS staff with the objective of resolving all their data-related concerns. Dar insisted that the data mined by the PBS was accurate, however, he did agree that there was a need for PBS to clarify and added that he personally would direct the PBS staff to hold a press conference to resolve all major concerns. That press conference is still awaited to his day and as a consequence, the government's credibility with respect to PBS data continues. One would urge the Finance Minister to direct the PBS staff to hold the press conference for failure to do so not only raises questions about the credibility of data but also of the appropriateness of his own policy decisions.