Inflation at lowest level in nine years

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ISLAMABAD: Inflationary pressure during May stands at 5.13 percent, the lowest level during the last nine years on the back of stable food and energy prices, the Pakistan Bureau of Statistics (PBS) reported on Monday.

During April, inflation, which is gauged by the Consumer Price Index (CPI) was recorded at 5.8 percent, while in May 2012, it stood at 12.3 percent. Since February 2004, when CPI was 4.31 percent, it is the lowest level of monthly inflation, it said.

On month-on-month basis, CPI inflation in May increased by 0.5 percent as compared to 1.1 percent in the previous month and an increase of 1.1 percent in May 2012.Economists believe that though from the external side, inflation has not put pressure on the economy as the crude oil price remained almost stagnant; however, domestically, huge bank borrowing by government to finance the income-expenditure gap (budget deficit) is yet to translate in prices and could jack up inflation to some extent in the months to come.

They say that energy and food prices are at their highest level but increase in their prices has almost stopped and this has produced low inflation figures.

The lower inflation rate is causing a rise in the stock exchanges and encouraging investors to invest more in stocks. But growth in the incomes of people is almost static and unemployment remains high.

Meanwhile, slow economic growth and a number of companiesí running below capacity means demand-related inflationary pressure is under check, the experts said.

According to the monthly inflation bulletin, average Consumer Price Index (CPI) inflation during July 2012 and May 2013 touched 7.51 percent, against 10.97 percent recorded in the corresponding period last fiscal year.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.1 percent in May as compared to 8.7 percent in April (year-on-year) and by 11.1 percent in May 2012.

Core NFNE inflation on a month-on-month basis increased by 0.3 percent in May as compared to 1.1 percent a month earlier and 0.8 percent in May 2012.

According to the CPI figures, prices of food and non-alcoholic beverages rose by 5.13 percent in May; alcoholic beverages and tobacco 12.98 percent; clothing and footwear 12.57 percent; furnishings and household equipment maintenance 7.7 percent; healthcare charges 11.22 percent; while transportation charges went down by 0.22 percent. Charges related to recreation and culture over this period went up by 7.7 percent; education 7.18 percent; and restaurants and hotel charges 8.34 percent in May over the same month in 2012.

From 2003 to 2012, inflation rate averaged 10.6 percent. CPI inflation touched the highest level of 25.3 percent in August 2008 due to a huge surge in food and commodity prices. In July 2003 it was recorded at the lowest level of 1.4 percent. CPI is a basket of goods that covers the retail prices of 374 items in 35 major cities.

Meanwhile, the Wholesale Price Index (WPI) on a year-on-year basis increased to 4.1 percent in May as compared to 6.8 percent a month ago and 7.06 percent in May 2012, the PBS data revealed.

The Sensitive Price Indicator (SPI), which gauges weekly-based inflation in kitchen items increased on a year-on-year basis by 6.8 percent in May as compared to 6.6 percent a month ago and 8.1 percent in May 2012.

According to the PBS data, year-on-year biggest food price increases were registered in onions 107 percent, tomatoes 78 percent, fresh vegetables 30 percent, tea 18 percent, wheat flour 17 percent, wheat 15 percent, honey 15 percent, cigarettes 13 percent, wheat products 13 percent, rice 11 percent, cereals 11 percent and milk powder 10 percent over the same month last fiscal year.

Decline in prices were recorded in pulse gram 21 percent, spices 19 percent, gram whole 16 percent, chicken 15 percent, fresh fruits 14 percent, besan 13 percent, potatoes 13 percent, pulse mash nine percent, eggs eight percent, pulse moong eight percent, vegetable ghee five percent and sugar three percent over May 2012.



Courtesy: †The News


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