Inflation decreased to 8% in December, from 8.3% last month, due to a marginal decrease in the prices of perishable food goods and the transport index, as seen by the latest data published by the Pakistan Bureau of Statistics (PBS).
As prices of non-perishable goods soared 16.3pc year-on-year during the month under review, higher food prices continued to raise the upward pressure on inflation.
Consumers saw a 9.9pc spike in restaurant and hotel rates, 9.6pc in clothes and 8.1pc in fitness, in addition to the food market.
In the other hand, the prices of perishable food goods dropped by 0.6 percent, while the prices of the transport industry fell by 3.5 percent, helping to minimise aggregate inflation.
During the month under analysis, data showed that the inflation rate of the Consumer Price Index (CPI) in urban areas increased 7pc year-on-year, while the rate in rural areas soared 9.5pc.
Inflation during the month decreased by 0.7pc on a month-on-month basis, the first drop in eight months. This was likely due to seasonal decreases in perishable goods rates.
On a combined basis, during the period July-December, average inflation was 8.63% compared to 11.11% in the same period last year. Inflation in urban areas averaged 7.31pc over the six-month stretch, compared to 10.63pc in rural areas.
In order to help demand and raise economic traction, the country’s central bank has overlooked high inflation estimates and held interest rates in negative territory.
The State Bank of Pakistan is expected to maintain its accommodative monetary policy posture, with relatively unchanged core inflation at 5.6pc (month-on-month) in December.
Analysts claim that an economic rebound is likely to take priority over inflationary pressures, particularly in the light of the second wave of Covid-19; the central bank could have space to push the inevitable monetary tightening back to May 2021 or even July 2021.