Latest news with #Rs1.9
Business Recorder
6 days ago
- Business
- Business Recorder
Softening inflation – scope for rate cut
Headline inflation finally reversed its trend, rising to 3.5 percent in May 2025 compared to 0.3 percent in the previous month and 11.8 percent in the same period last year. This change is largely driven by the base effect—over the past eleven months, a high base effect contributed to lowering the headline number. Now, with the full cycle complete, the low base effect has come into play, pushing inflation upward. However, due to negative month-on-month (MoM) inflation in six out of the past twelve months, the increase in inflation—despite the base effect reversal—remains below the SBP's medium-term target range of 5 to 7 percent. It is likely to stay under 5 percent for the remainder of the calendar year. In May, on abasis, month-on-month basis, inflation declined by 0.2 percent. This was driven by falling prices in food (-0.2%), transport (-0.2%), recreation and culture (-4.7%), and housing and utilities (-1.2%). These declines more than offset increases in clothing (1%), education (0.7%), and miscellaneous categories (1.7%). One of the most notable declines was seen in electricity charges. May marked the seventh consecutive month of falling electricity prices, with a 7.0 percent drop. This decrease is due to the implementation of a negative Rs1.55/kWh Quarterly Tariff Adjustment (QTA) for 3QFY25, which began in May, adding to the existing Rs1.9/kWh QTA. Within the food category, falling wheat prices had a significant downward impact—dropping 7.3 percent MoM. This decline also reduced the prices of wheat flour and wheat-based products and had a cascading effect on other food items. Additionally, prices of perishable items like tomatoes and onions also saw notable declines. Core inflation, however, has not declined at the same pace. It stood at 7.8 percent in May (urban core: 7.3%, rural core: 8.8%) compared to 8 percent in April and 14.2 percent in May last year. The overall decline in inflation is primarily due to falling food prices—partly because of the absence of a wheat support price—and to a broader decline in global commodity prices. Energy prices, particularly fuel and electricity, are also decreasing, supported by a stable currency amid the global commodity price downturn. However, second-round effects of the earlier inflation surge are still in play. As a result, categories like health, education, and miscellaneous remain in double digits, and clothing and footwear are approaching that threshold due to seasonal Eid-related demand pressures. A divergence between urban and rural inflation is emerging. In May 2025, urban food inflation stood at 5.3 percent compared to just 2.1 percent in rural areas. Conversely, in non-food categories, urban inflation was 2.4 percent while rural inflation was 4.6 percent. Despite these differences, the overall headline inflation rates were similar: 3.5 percent in urban areas and 3.4 percent in rural areas. Demand-side pressures and economic activity levels vary across regions. Overall, headline inflation for the first eleven months of FY25 (11MFY25) averaged 4.6 percent, a sharp decline from 24.5 percent during the same period last year. The trend is expected to remain steady, and barring any external or climate-related shocks, inflation is projected to stay below 5 percent in 2025. This gives the SBP room to further cut interest rates.
Business Recorder
29-05-2025
- Business
- Business Recorder
PECO factory sealed over non-payment of Rs1.9mn property tax
The Excise and Taxation Department of the Punjab government has sealed the factory premises of Pakistan Engineering Company Limited (PECO), a publicly listed company, due to non-payment of property tax amounting to Rs1.9 million. The company disclosed the development in a notice to the Pakistan Stock Exchange (PSX) on Thursday. 'The management is actively engaging with the relevant authorities to resolve the matter and ensure restoration of access to the factory offices to avoid disruption in administrative functions,' PECO said, in its filing to the bourse. PC initiates privatisation process of PECO Concerning the announcement of a Right Issue by PECO made in January 2025, the company informed that it has not proceeded with the said Right Issue due to directives issued in two separate proceedings initiated by the Securities and Exchange Commission of Pakistan (SECP). 'The SECP has restricted PECO from proceeding with the Rights Issue, citing regulatory limitations primarily due to the company's name appearing in the CIB report in relation to an overdue liability,' it said. PECO added that it is actively pursuing appropriate forums to clarify that the proposed Right Issue is 'aimed at addressing these very compliance concerns, and therefore, the restrictions should not apply in such a context'. Initially established under the name of Batala Engineering Company (BECO) in 1950, PECO produced light engineering products. Historically, the company manufactured high-quality machine tools, pumps, power looms, concrete mixers, cranes, power presses, electric motors, bicycles, steel rolled products, electricity transmission towers, structures and general fabrication. The plant was originally set up at Badami Bagh, Lahore, spanning 34 acres, with the neighbouring area subsequently converted into the steel centre of Pakistan. Due to the rapid addition of products, the land area became inadequate for further expansion and 247 acres of land were acquired in 1960 at Kot Lakhpat industrial zone, Lahore, for relocating factory premises in the future. After being taken over by the government in 1972 under the nationalisation reforms, it was rechristened Pakistan Engineering Company (PECO).
Business Recorder
13-05-2025
- Business
- Business Recorder
Power tariffs: Summer relief extends
The summer season of massive relief continues for electricity consumers, as another Rs1.55/unit cut in lieu of Quarterly Tariff Adjustment (QTA) has been notified by the regulator. The QTA for 3QFY25 will be in field for May, June and July QTA for May and June will be in addition to the 2QFY25 QTA amounting to Rs1.9/unit – that is already in place till June 2025. The combined relief over March 2025 now stands at Rs6.2/unit for protected category slabs, and nearly Rs5/unit for unprotected. The impact includes negative monthly fuel charges adjustment of Rs1.18/per unit, of which Rs0.9 is the temporary adjustment that will last another month. The standalone monthly FCA at Rs0.28/unit for May 2025 is the lowest since September 2024, as deviations with reference generation have increased of late – largely owing to reduced hydrology and increased reliance on RLNG. The tariff composition has a number of temporary relief heads when compared with March 2025. This is what is in field. Tariff Differential subsidy (TDS) of Rs1.71/unit for April-June, 2QFY25 QTA of negative Rs1.9/unit for Apr-Jun, 3QFY25 QTA of negative Rs1.55/unit for May-July, FCA retention relief of negative Rs0.9/unit for Apr-Jun, and Rs0.28/unit on account of monthly FCA for May 2025. The base tariff, surcharges, duties, and taxes, meanwhile, have remained unchanged. From a year ago, the tariff respite is rather considerable, ranging from 9 percent to 48 percent across various slabs. Effective tariffs are down Rs8/unit for protected and nearly Rs6/unit for unprotected consumers year-on-year. Interestingly, the effective tariff for the non-lifeline protected consumer in the lowest category is now lower than the lifeline consumer's highest slab. The difference is marginal, and temporary – as non-lifeline consumers do not get the benefit of periodic adjustments, which have been rather significant of late. Nearly half of the capacity charges reduction for 3QFY25 stemmed from the impact of termination of 5 plants, and renegotiated terms with a number of IPPs. A considerable portion owes to the impact of closure of Neelum Jhelum power plant – which may have led to some savings on account of capacity charges but is a net negative for the sector – as no contribution will lead to a visibly altered reference generation mix for the next annual tariff rebasing exercise. Early signs indicate FY26 base tariffs will be a tad lower or at pat with FY25, and periodic adjustments are expected to be much lower, given the impact of IPP negotiations and terminated contracts will likely be built in the revised Power Purchase Price (PPP) for FY26. All eyes are now on the hydel flows which will be key in keeping power tariffs within close proximity of base tariffs for FY26.
