Business

Inflation clocks in at 13.8% in May

Published

2 years ago

Farwa

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.

Business

Exchange achieves all-time high: KSE-100 index surpasses 72,500 points

Published

13 hours ago

Farwa

With the benchmark KSE-100 index hitting a record-breaking high of 72,501 points, the Karachi Stock Exchange saw yet another incredible rise.

Within Pakistan’s financial environment, investors demonstrated a strong sense of trust in the market as the bullish trend continued.

As a result of the significant inflow of investment and optimism among market players, the index had an amazing 450-point rise during the trading session.

In their analysis of the market’s remarkable performance, financial analysts pointed to a number of causes for the upward trend, such as encouraging economic data, robust company profits, and the government’s proactive measures to promote economic expansion.

The durability and upward momentum of the market have also been greatly aided by continuous infrastructural investments and efforts meant to boost investor confidence.

In the meantime, interbank rates increased by six paisas, and the US dollar’s value saw a slight rise in the currency market. As a result of the current market conditions and the dynamic nature of foreign exchange swings, the dollar was quoted at Rs 278.45 in the interbank market.

Business

The investment plan for K-Electric will be audited every three months.

Published

13 hours ago

Farwa

In light of K-Electric’s inability to persuade NEPRA with its Rs. 484 billion investment plan, the regulatory body has decided to hold off on making changes to the utility’s Transmission & Distribution Investment Plan until FY 2030.

As stated in the order, the NEPRA will select the terms of reference (ToR) for the third-party audit in addition to announcing the quarterly audit. A report on the company’s investment plan’s progress will need to be submitted every quarter.

A performance report would also be required under the investment plan by K-Electric, Karachi’s only power distribution utility, according to the statement. A secure mechanism to avoid electrical mishaps was also mandated by the authority to the utility.

In the meantime, the power distribution firm stated in a statement that the investment plan will boost the utility’s infrastructure to meet present and future demands, decrease transmission and distribution losses, and increase customer base growth.

With investments totaling Rs. 544 billion, KE has been able to more than halve its T&D losses and quadruple its customer base and power consumption since privatisation, according to the statement.

A hearing in March 2023 was held to inform stakeholders about the projects that KE management had planned for FY2024–FY2030, and the statement claimed that the plan had been presented in compliance with regulatory requirements.

In terms of investment areas including expansion, energy loss reduction, network rehabilitation, maintenance, and safety, KE claimed to have clearly defined priorities and projects for this era.

The plan calls for the construction of transmission lines and grids, which will increase the dependability of KE’s network and make it possible to take on more electricity from the National Grid.

In order to manage the city’s needs through targeted investments and tech-based interventions, CEO KE Moonis Alvi said, “We are looking to invest $2 billion in Transmission and Distribution over the next 7 years.” The work of all the stakeholders who have contributed to this trip and who will help us modernise our infrastructure and get ready for the future is something I’d like to acknowledge.

The investment plan is a supplement to the business’s Power Acquisition Programme, which outlines KE’s goal of having 30% renewable energy in its generation mix by 2030. As part of its efforts to provide everyone with access to reasonably priced energy, the firm has also been granted regulatory permission for its RFPs for 640 MW of renewable projects.

Business

$399 million in airline revenue is being blocked by Pakistan. IATA

Published

14 hours ago

Farwa

Pakistan and Bangladesh have been urged by the International Air Transport Association (IATA) to promptly release airline profits that are being withheld in violation of international agreements.

“Airlines are unable to repatriate over $720 million ($399 million in Pakistan and $323 million in Bangladesh) of revenues earned in these markets, resulting in a severe situation,” an IATA statement stated.

“Money-denominated expenses like lease agreements, spare parts, overflight fees, and fuel must be paid for in a timely manner by repatriating revenues to their home countries.”

Delaying repatriation raises exchange rate risks for airlines and violates bilateral agreements’ international commitments. In order for airlines to effectively continue to offer the aviation connectivity that both of these countries depend on, Pakistan and Bangladesh must immediately release the more than $720 million that they are blocking, according to Philip Goh, Regional Vice President for Asia-Pacific at IATA.

Pakistan needs to make the difficult repatriation procedure less complicated. According to the statement, this presently includes the need to present audit certifications and tax exemption certificates, both of which create needless delays.

Approximately 425,000 jobs and $2.8 billion in economic activity were supported by Pakistan’s aviation industry prior to COVID-19. Passenger numbers are predicted to increase by more than 2.5 times by 2040 after returning to pre-COVID levels in 2023, according to the statement.