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Inflation clocks in at 13.8% in May

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  • Increase comes on back of a surge in prices of non-perishable food items.
  • On a month-on-month basis, inflation increased by 0.4% in May.
  • Cumulatively, 11MFY22 average inflation reached 11.29% year-on-year.

KARACHI: The inflation rate, based on the Consumer Price Index (CPI) in May clocked in at 13.8% on a year-on-year basis — the highest since January 2020 — due to a surge in prices of non-perishable food items.

The CPI accelerated in May over the same month a year ago, showed the inflation bulletin released by the Pakistan Bureau of Statistics (PBS) on Wednesday. The index remained higher in line with the trend since the last three months.

The new coalition government of Prime Minister Shehbaz Sharif struggles to contain inflation, which experts said, was the outcome of record-high global commodity prices, and a 26% devaluation of the Pakistani rupee since the start of the outgoing fiscal year.

On a month-on-month basis, inflation slowed down as it clocked in at 0.44% in May 2022 compared to an increase of 1.6% in the previous month and an increase of 0.1% in May 2021. Cumulatively, 11MFY22 average inflation reached 11.29% year-on-year compared to 8.83% in 11MFY21.

The CPI-based inflation rate jumped 12.4% in urban areas and 15.9% in villages and towns, according to PBS.

Speaking to Geo.tv, an analyst from Arif Habib Ltd, Sana Tawfiq, said that the inflation rate was below the market expectation of 14.3%.

“An increase came on the back of three sectors — food, transport, and housing and electricity,” she said.

Tawfiq elaborated that an increase in food group month-on-month was in line with expectation, citing poultry items and wheat as major drivers.

The analyst was of the view that the impact of a significant increase in the price of petroleum products was partially reflected in May’s inflation rate; however, the complete impact would be seen in June’s number.

The inflation rate remained in double-digit — which has eroded the people’s purchasing power — due to an increase in the prices of food items, which are now taxed by the government. The pace of food inflation surged 15.5% in cities and 19% in villages and towns last month.

The prices of both non-perishable and perishable food products increased significantly last month. The food group saw over a 17% increase in prices in May compared to the same month a year ago. Prices of perishable food items increased 26.37%, according to the PBS.

Non-food inflation increased 10.4% in urban areas and 13.1% in rural areas, according to the national data collecting agency.

Core inflation — calculated after excluding food and energy goods — jumped 9.7% in urban areas and 11.5% in rural areas. Tawfiq maintained that a continuous increase in core inflation is a “major concern.”

The prices of tomatoes — an essential kitchen item — were higher by 162.22% last month compared to a year ago, followed by a 153.44% increase in the rates of onions, and around 60% of various types of ghee and cooking oil, according to the PBS.

The prices of pulses increased by over 50%, wheat by 18.42%, and meat and vegetables by nearly one-fourth and vegetables, according to the PBS.

“Going forward, the inflation rate would remain under pressure and in double digits for the next three months; it would start easing from September onwards,” the analyst said.

Regarding the monetary policy rate, scheduled to be announced on July 7, she noted that the central bank is expected to raise the policy rate by another 100-150 basis points.

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The inaugural flight of Azerbaijan Airlines is between Baku and Karachi.

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The national airline of Azerbaijan launched direct flights from Baku to Karachi today. There will be two weekly flights on this route, on Thursdays and Sundays.

The first flight will land in Karachi, and Azerbaijan’s ambassador, Khazar Farhadov, will be there to greet it.

This evening also marks the departure of the inaugural flight from Karachi to Baku, in addition to the arrival of the flight from Baku.

Azerbaijan Airlines said last month that it would be growing its network and flight operations in Pakistan.

Aviation insiders have verified that Azerbaijan Airlines is preparing to launch service to Karachi in the coming month of April.

In addition to its current services in Islamabad and Lahore, the airline plans to launch its Karachi route on April 18, with the inaugural flight anticipated to depart on that date.

Azerbaijan Airlines has been given permission to operate flights on the Karachi route, according to sources within the Civil Aviation Authority (CAA).

Following a bilateral agreement between the two nations, Azerbaijan Airlines has been given permission to extend its operations in Pakistan.

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Fly Jinnah opens a new route internationally.

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Two weekly flights will be the starting frequency of the new route, which will connect the two cities.

According to a representative for Fly Jinnah, the company is pleased to announce the opening of a third international route from Islamabad to Muscat, the capital city of Oman, marking another significant milestone after the successful debut of flights from Islamabad and Lahore to Sharjah.

According to him, this development is in line with our goal of giving our clients more options for reasonably priced, value-driven local and international air travel.

The airline serves five main cities in Pakistan: Karachi, Lahore, Islamabad, Peshawar, and Quetta. Its fleet consists of five Airbus A320 aircraft, all of which are contemporary.

In addition to the current flight path to Sharjah, United Arab Emirates, this new route expands Fly Jinnah’s network of foreign destinations.

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Tajir Dost app: traders don’t seem interested in registering

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To tax retailers in Pakistan, the Tajir Dost app was released. The sources stated that the government hopes to tax 3.5 million merchants through the app.

Ajmal Baloch, the president of All-Pakistan Anjuman-e-Tajran, stated that he made reservations with FBR on the SRO within a week.

The Federal Board of Revenue (FBR), according to him, cannot be a “Tajir Dost” because of its unethical actions.

Baloch believed that since electricity bills allow traders to pay a predetermined advance income tax, further taxes are unnecessary.

The trader, according to him, is already paying thirteen different kinds of taxes on the commercial meter. “A trader already pays between Rs. 15,000 and Rs. 20,000 in taxes annually, but you are requesting Rs. 1,200 per month in taxes.”

Mr. Ajmal summoned representatives of the Federal Board of Revenue (FBR) to a meeting with the trade associations to talk about the indirect taxes that the merchants are paying.

Additionally, he claimed that FBR officers are charging the traders, the majority of whom are less educated, “monthly charges.”

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