Lowest inflation in over three years

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ISLAMABAD : Annual inflation was 7.36 per cent during the outgoing fiscal year 2012-13, the slowest pace of increase in prices in the last three and half years.

The easing trend in inflationary pressures in the past few months has helped the government to keep the inflation below the annual inflation target of 9.5pc for the fiscal year.

Annual headline inflation, measured by the Consumer Price Index (CPI), leapt on the back of food inflation, rising oil prices and more than 13pc increase in the electricity price during the fiscal, suggested the data of Pakistan Bureau of Statistics (PBS) released on Monday.

Annual inflation was recorded at 11.01pc during the last fiscal year.

Since May 2013, an upward trend in inflation was witnessed and it is expected that the inflation would witness a double-digit growth in the current fiscal year 2013-14 because of increase in general sales tax rate along with other taxes.

On a month-on-month basis, the inflation in June 2013 went up by 5.9pc compared to the same period of the previous year.

Core inflation, which is non-food and non-energy inflation, rose 7.8pc in June from a year ago, but also witnessed a slight increase of 0.4pc when compared with May.

The State Bank of Pakistan (SBP) has revised its key policy rate to 9pc from 9.5pc in the monetary policy announced on June 22.

This fall was the outcome of decline in core inflation and poor credit off-take by the private sector.

In June, total food inflation was 7.9pc from a year ago; non-perishable food items witnessed a surge of 6.95pc. However, prices of perishable items increased 15.08pc in June over the same month last year.

The prices of non-perishable food items witnessed significant growth in the outgoing fiscal year.

These are besan (23.84pc), pulse gram (21.66pc), honey (18.98pc) and beans (16.87pc).

The perishable food items witnessed variations due to seasonal factor or cut in supply to the market are tomatoes, potatoes, onions, etc.

Among the non-food items, price of text books up (35.24pc), woollen readymade garments (20.16pc), doctor clinic fee (18.95pc), dopatta (18.78pc), cleaning and laundry (17.55pc), household servant (17.12pc), utensils (16.65pc), motor vehicle tax (16.55pc), cigarettes (15.92pc), firewood whole (15.62pc), tailoring (15.58pc) and readymade garments (15.58pc) in 2012-13 over the last year.

On the other hand, non-food inflation witnessed an increase of 4.4pc in June from a year ago, mainly driven by slight increase in oil prices.

The analysts linked the hike in inflation to continued pressure on food prices, fiscal pressure due to security situation, adjustment in utility prices, continuing depreciation of the rupee, which pushed upward the cost of imported raw materials, goods and services, high mark-up rate and loss in productivity because of power outages.

The impact of imported inflation was also very high during FY12-13, especially due to import of essential food items like sugar, edible oil, pulses and tea.

Inflation measured through Sensitive Price Index went by 7.77pc in the fiscal 2012-13 and that of the Wholesale Price Index, witnessed an increase of 7.35pc during the outgoing fiscal year.

Courtesy: dawn

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