Inflation has gone up since December 2017
It may not be a good time to invest your savings in gold, which is trading close to its all-time high, but this could be a good time to spend more on vacations because economy class airfare is 22% cheaper this year.
Gold was 20% more expensive in December 2018, compared to its price in the same month of the previous year, the Pakistan Bureau of Statistics revealed on Wednesday. This may not surprise those keeping a track of gold prices lately, which surged to an all-time high of Rs68,000 per tola on December 20. By contrast, the price of economy airfare fell by more than a fifth this year.
According to the PBS data on inflation, prices of the basket of common goods and services increased 6.17% in December over the same month in 2017. The PBS uses this basket to track the prices of essential items an average household consumes every day.
Among the commodities and services that increased the most in terms of price were gas (85%), train fare (56%), CNG (30%), diesel (29%), iron bar (24%), petrol (24%) and mobile phone services (18%). This means from cooking to taking a train or bus up country and even making a phone call is going to cost more now compared to the same time last year.
However, the increase in December prices was less than the previous month and indicates inflation has actually been slowing down since October when it reached 7%, its highest level of in four years.
Besides airfare, the price of vegetables and lentils also decreased in the last month of 2018. According to PBS data, tomatoes and onions are 50% cheaper this year while potato prices decreased by 36% and daal mash became 6% cheaper compared to December 2017.
In March 2018, the inflation rate was hovering around 3.25%, but prices had been going up since then. This was because of a rise in international crude oil prices and devaluation of the Pakistani rupee. As a result, prices were increasing. The recent measures taken by the government, such as increasing gas and electricity prices, which have 29.4% weight in the consumer basket, had pushed the prices further up.
The central bank has been raising its policy rate to fight inflation and achieve economic stability. In the last monetary policy, the State Bank of Pakistan raised its interest rate to a five-year high of 10%. The inflation rate could reach 7.5% by June, according to a forecast by the SBP.