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Wheat import to exert more pressure on food index

Karachi, June 02, 2022: The government’s strategy to import wheat is likely to exert more pressure on non-perishable food index as the average 11-month Financial Year 2022 CPI reading now stands at 11.26%.

In May, food inflation gained mild respite from the decline in prices of perishable items and the housing index declined on account of lower electricity charges.

However, core inflation, more indicative of long-term inflation outlook, continues to spike as Core-Urban and Core-Rural inflation rose to 9.7% and 11.5%, respectively.

“We believe, second-round effects on core inflation will likely be pronounced by the sharp increase in international food prices, which is also reflected in the domestic prices and cost of imported items,” said Wajid Rizvi at JS Research.

He added that the FY23 estimates range from 13.87% to 15.23%, facing an upside risk from higher electricity tariff adjustments from fuel costs and the rise in food inflation in terms of secondary impact from higher retail fuel prices. Meanwhile, the spike in inflation from edible oil has simmered to a great deal as Indonesia lifted the ban on exports. Even though this has not been a significant breather to Palm Oil prices, the prices stand relatively stable at the moment.

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