January 3, 2019 (MLN): Consumer Price Index (CPI) inflation in Pakistan has declined by 0.4% over the month of December, mainly due to the dip in CPI of perishable food items (-13.78%, MoM).
On a year-on-year basis, the CPI inflation jumped by 6.2% in December 2018, primarily in response to the increase in CPI of housing, water, electricity, gas and fuels (+9.08%, YoY). These utilities collectively carry a weightage of 29.4% in the CPI basket, second to the food and non-alcoholic beverages group which carries a weight of 34.8%.
Although several other groups recorded much larger jumps in CPI, including alcoholic beverages & tobacco (+14.3%), transport (+18.2%) and education (+10.4%), and perishable food items recorded a 26.3% decline, yet the impact of utilities remained the highest due to its larger weight in the basket.
These readings mark an optimistic end to the year 2018, as the market and SBP expectation for yearly inflation in December had stood at 6.5% to 7.5%. Moreover, the weekly SPI over the past few weeks had been hinting towards a slowdown in inflation, therefore a decline in month-on-month inflation was expected.
Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.4% on (YoY) basis in December 2018 whereas on (MoM) basis, it increased by 0.3%.
Compared to the previous month, the top commodities which registered decrease in CPI include fresh vegetables, tomatoes, fresh fruits, eggs, motor vehicle accessories, woolen readymade garments and plastic products.
Similarly, as compared to December 2017, the top commodities which registered an increase in their CPI comprise spices, meat, chicken, honey, tea, dry fruits, rice, gas, newspaper, motor fuel, kerosene oil, motor vehicles, construction input items, construction wage rates.
