ISLAMABAD, Oct 03 (DNA): Inflation increased to 9% in September from
August’s 8.2%, according to information shared by the Pakistan Bureau of
Statistics (PBS).

The PBS calculates the inflation rate by measuring the prices of a
basket of 480 common goods and services, such as the cost of education,
house rent, utility bills and food and beverages. An increase in the
inflation rate means the prices of goods and services have increased.

Higher food item prices such as tomatoes, wheat and potatoes pushed the
inflation up during September this year, said senior research analyst
Karim Punjani. “The rural inflation has been higher in September as
compared to urban. It is because the rural inflation depends more on
food items,” Punjani said.

The rural inflation increased by 11.1% as compared to urban inflation of
7.7%. He said that the inflation during the month was more due to supply
than demand. Inflation generally increases due to demand. But the
monsoon damaged crops and also disrupted logistics, which pushed the
prices up for essential goods. Moreover, wheat and sugar prices also
went up.

Increasing policy or interest rates is the most important tool for a
country’s central bank to leash inflation. Higher interest rates help
curtail spending by people and companies. It in turn reduces demand,
which tends to bring down prices.

However, Punjani thinks the State Bank will not have the luxury to
increase interest rates to keep inflation in check. “There’s growth [in
the economy] but it has not happened across the board. Some sectors have
shown growth but not all. The State Bank may not think of increasing
interest rates any time soon unless the economy shows sustainable
growth,” he said.

The International Monetary Fund (IMF) programme for Pakistan, which has
been temporary dismantled till December this year after the country went
into lockdown due to the coronavirus pandemic earlier this year, may
resume from January.

Punjani says the resumption in the programme may cause energy prices to
swell, which also increase inflation. DNA

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