Rising food prices behind inflationary pressures: SBP

Rising food prices were the major driving force behind inflationary pressures as the group's weighted contribution in the CPI basket jumped to 52.2 per cent in May compared to 37.6pc in the corresponding month of 2019, the State Bank of Pakistan's (SBP) Inflation Monitor for May showed.

The monitor also provided details on inflation trends in urban and rural areas. In both regions, they were dominated by food price escalation which ate up a major chunk of the masses' income.

The weighted contribution of food group in the overall urban CPI inflation increased to 52.2pc during May from 48.3pc in April, 2020. The weighted contribution of non-food groups witnessed sharp decline during the year to 47.8pc in May from 62.4pc in the same month last fiscal year.

"Non-food group was 62.4pc during corresponding month ( May 2019) of last year," said the SBP adding that the non-food contribution in the CPI basket was 51.7pc in April 2020.

Despite ample production of staple foods like wheat and rice, enough to meet the local demand, consumers continue to pay high prices for these items at times even higher than those in the international market. Often, wheat prices in Pakistan are higher than international prices.

For rural basket, the weighted contribution of food group in the overall rural CPI inflation increased to 63.8pc during May compared to 52.4pc in the same month of last year. The CPI for April was 58.8pc.

According to the SBP report, the weighted contribution of non-food group decreased to 36.2pc in May from 41.2pc in the previous month whereas its share was 47.6pc during corresponding month last year, said the SBP.

After the spread of Covid-19 in March, the government opted for shutdown to contain the virus. The shutdown immediately caused joblessness on a large scale particularly for the daily wagers. At the same time, food prices increased across the country while a shortage was also noted in some places.