According to the Economic Survey FY2020, stable inflation is always linked with well growth and development outcomes. Price stability not only declines uncertainty but also offers multi-dimensional optimistic impacts on economic, social, and psychological spheres of all segments of the society, mainly poor families. Prior to the COVID-19 outbreak, the Government of Pakistan was no doubt making attempts to stabilize the inflationary pressure that originated from requisite adjustment strategies. Thus, the spike in inflation which appeared because of energy tariff adjustments and the adoption of market-based exchange rate was flattened out mostly because of the government steps taken for price stability. The emergence of COVID-19 and social distancing strategies to control this pandemic have affected demand and supply across the globe. State Bank of Pakistan (SBP) was maintaining double-digit interest rate to control inflation in the country; it has now sharply cut the policy rate to 7 percent. The easing of the policy rate is aimed at supporting economic activity in the wake of COVID-19 amid a fall in inflation outlook in Pakistan.
| Inflation In Pakistan (Period Average and Y-o-Y percent Change) | ||||||
|---|---|---|---|---|---|---|
| Index | Average July- February percent changes | February over February percent changes | ||||
| 2020-2021 | 2019-2020 | 2018-2019 | 2020-2021 | 2019-2020 | 2018-2019 | |
| CPI (National) | 8.25 | 11.71 | 6.00 | 8.70 | 12.40 | 6.75 |
| CPI(Urban) | 7.18 | 11.32 | 6.39 | 8.60 | 11.21 | 7.23 |
| CPI(Rural) | 9.87 | 12.31 | 5.42 | 8.85 | 14.22 | 6.02 |
| SPI | 11.05 | 15.25 | 2.74 | 11.95 | 14.52 | 7.17 |
| WPI | 5.32 | 13.49 | 15.95 | 9.51 | 12.68 | 13.93 |
Consumer Price Index (CPI) general
CPI inflation General, increased by 8.7 percent on year-on-year basis in February 2021 as against to an increase of 5.7 percent in the previous month and 12.4 percent in February 2020. On month-on-month basis, it grew by 1.8 percent in February 2021 as against to a fall of 0.2 percent in the previous month and a decline of 1.0 percent in February 2020.
CPI Inflation Urban
CPI inflation Urban, grew by 8.6 percent on year-on-year basis in February 2021 as against to a rise of 5.0 percent in the previous month and 11.2 percent in February 2020. On month-on-month basis, it fell by 2.3 percent in February 2021 as against to a fall of 0.2 percent in the previous month and a fall of 1.1 percent in February 2020.
CPI Inflation Rural
CPI inflation Rural, also grew by 8.8 percent on year-on-year basis in February 2021 as against to a rise of 6.6 percent in the last month and 14.2 percent in February 2020. On month-on-month basis, it grew by 1.1 percent in February 2021 as against to a fall of 0.3 percent in the last month and a fall of 1.0 percent in February 2020.
Sensitive Price Index (SPI)
SPI inflation on YoY also grew by 11.9 percent in February 2021 as against to a rise of 7.7 percent a month earlier and a rise of 14.5 percent in February 2020. On MoM basis, it grew by 3.1 percent in February 2021 as against to a decline of 0.8 percent a month earlier and a decline of 0.8 percent in February 2020.
Wholesale Price Index (WPI)
WPI inflation on YoY basis grew by 9.5 percent in February 2021 as against to a rise of 6.4 percent a month earlier and a rise of 12.7 percent in February 2020. WPI inflation on MoM basis grew by 2.2 percent in February 2021 as against to a rise of 2.5 percent a month earlier and a decline of 0.7 percent in same month i.e. February 2020.
Core Inflation (NFNE)
Measured by non-food non-energy Urban also grew by 6.4 percent on (YoY) basis in February, 2021 as against to a rise of 5.4 percent in the last month and 8.0 percent during February, 2020. On (MoM) basis, it grew by 1.1 percent in February, 2021 as compared to rise of 0.9 percent in previous month, and a rise of 0.2 percent in same month of previous year i.e. February, 2020. Measured by non-food non-energy Rural grew by 7.7 percent on (YoY) basis in February, 2021 as against to a rise of 7.8 percent in the last month and 9.4 percent in February, 2020. On (MoM) basis, it grew by 0.5 percent in February, 2021 as against to an increase of 1.1 percent in last month, and a rise of 0.5 percent in same month of last year i.e. February, 2020.
Core Inflation (Trimmed)
Measured by 20 percent weighted trimmed mean Urban grew by 7.9 percent on (YoY) basis in February, 2021 as against to 5.7 percent in the previous month and 9.7 percent in February, 2020. On (MoM) basis, it grew by 1.0 percent in February, 2021 as against to a rise of 1.0 percent in the previous month and an increase of 0.1 percent in same month of last year i.e. February, 2020. Measured by 20 percent weighted trimmed mean Rural grew by 9.2 percent on (YoY) basis in February, 2021 as against to 8.1 percent in the previous month and by 12.8 percent in February, 2020. On (MoM) basis, it grew by 0.5 percent in February, 2021 as against to an increase of 1.2 percent in the previous month and a rise of 0.6 percent in same month of last year i.e. February, 2020.