Economy

CPI increases sharply to 8.70pc YoY in February

Karachi, March 02, 2021: Headline inflation increased to 8.70 percent YoY in February, compared to 5.65 percent YoY in the preceding month. This was expected, given the hike in electricity charges.

Electricity charges were the key contributor to a higher CPI in February, increasing by ~29 percent MoM. Over half of the MoM increase in the month was due to the increase in electricity charges.

Food prices showed a mixed trend in the month, where traditionally volatile items such as tomatoes, onions and other vegetables decreased in price; however, this was largely nullified by the recovery in chicken prices after a decline last month. With Ramadan just around the corner, it seems inevitable that food prices will remain a sensitive issue in March and April.

The jump in local and international cotton prices led to the largest MoM increase in the clothing & footwear index in recent memory (at least it is the largest since the new CPI base was implemented).

After staying within 5.4 percent-5.6 percent YoY throughout July to January, core inflation jumped to 6.4 percent YoY in Feb-2020.

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