With the announcement of SPI on Friday, and CPI data on Monday 31st May 2021, the inflation scenario has significantly improved. The CPI during the month of May came to 10.9% compared to 11.2% a month earlier, which is a clear sign of easing in inflationary pressures.
This assertion is strengthened by two further developments. One, the month-on-month inflation dropped to only 0.1% compared to 1% in April. Two, the average inflation for 11 months (July-May) has come down to 8.8% compared to double-digit inflation on 10.9%.
It is also important to underline that the food inflation has also started to decline. In urban areas, month-on-month food inflation come down from 2.7% in April to 1.1% in May. Similarly, in rural areas, food inflation dropped from average of 14.1% in April to 12.8% in May. Similar trends are also witnessed in core-inflation. Both in rural and urban areas, year-on-year core-inflation declined from 7% to 6.8% and from 7.7% to 7.6% respectively.
Going forward, we expect inflationary pressure to further abate in view of good crops, improved supply conditions, and vigilant monitoring of price movements in the markets.
The SPI inflation has also declined by 0.63% compared to a week earlier. Similarly, the year-on-year SPI inflation has also come down from 17.23% to 16.34%. As per the data, prices of 10 items decreased in the week compared to the last week, while 29 remained stable, and for 12 commodities witnessed increase. Prices of essential commodities such as tomatoes, potatoes, ghee etc. have either witnessed decrease for the past 6 weeks or have remained stable. However, the most notable reduction is seen in the prices of chicken and eggs.
The factors that had contributed to recent increase in the SPI have all uniformly shown a declining trend. All these developments reflect the result of regular monitoring of markets and close coordination with provincial authorities. In particular, steps were taken to counter the effects of cartelization by Competition Commission of Pakistan and strict action by Provincial Governments against hoarding and profiteering. Because of these efforts the chicken prices which had risen as high as Rs. 500/kg in certain places, have come down to moderate levels, though there is still room for further reduction.
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