CPI inflation up by a percentage point to 7.93pc

ISLAMABAD: Inflationary pressure has again started picking up, as in December 2012, the consumer price index (CPI) inflation jumped up by a percentage point to 7.93 percent, while in November it was 6.9 percent, according to the data of Pakistan Bureau of Statistics (PBS) on Tuesday.

Economists have already termed this November figure of 6.9 percent (lowest in last five-and-a-half-year) government’s tactic to bring the bank’s discount rate to a single-digit and it achieved the target when the State Bank of Pakistan (SBP) in December slashed its discount rate by 50 basis points to a single digit of 9.5 percent.

Sources in the bank privy to the development told The News on the condition of anonymity that it was not the true picture of inflation based on which the bank took the decision of slashing policy rate and it should have to maintain the status quo.

Majority of the bankers, who formulate the monetary policy, were not in favour of slashing the rate further to a single-digit, as according to them, inflation prospects were not favourable, he added.

According to the monthly CPI bulletin, average CPI inflation during the first-half (July-December 2012-13) touched 8.32 percent against 10.87 percent recorded in the corresponding period last year. In December 2012, it stood at 7.9 percent on year-on-year basis as compared to 6.9 percent in November 2012 and 9.7 percent in December 2011.

Kaiser Bengali, a senior economist said, “As the government has substantially reduced development expenditures, the inflation figure is becoming small, but still it is a threat to the economy.”

From 2003 to 2012, Pakistan’s inflation rate averaged at 10.6 percent. The CPI inflation touched highest level of 25.3 percent in August 2008 due to huge

surge in food and commodity prices, while 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.

Core inflation measured by non-food, non-energy CPI (core NFNE) increased by 9.8 percent in December 2012 as compared to 9.7 percent in November 2012 (year-on-year) and by 10.1 percent in December 2011.

Meanwhile, the wholesale price index (WPI) on a year-on-year basis increased to 9.6 percent in December 2012 as compared to 7.7 percent a month ago and 8.3 percent in December 2011.

The sensitive price indicator (SPI), which gauges weekly based inflation in kitchen items increased on year-on-year basis by 8.2 percent in December 2012 as compared to six percent a month ago and only three percent in December 2011.

According to the CPI figures, food and non-alcoholic beverages prices went up by 7.2 percent in December 2012. The prices of alcoholic beverages and tobacco went up by 18.16 percent; clothing and footwear by 15.8 percent, furnishings and household equipment maintenance by 12.3 percent, healthcare charges by 14.3 percent and transportation charges by 8.94 percent.

Recreation and culture charges over this period went up by 17.86 percent, education charges by 10 percent and restaurants and hotel charges by 10.66 percent in December 2012 over December 2011.

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