June inflation steady at 3.16pc on stable food prices

ISLAMABAD: Pakistan inflation was unchanged at 3.16 percent year-on-year in June, thanks to stability in food prices, government data showed on Wednesday.
According to the Pakistan Bureau of Statistic (PBS) consumer price index (CPI) inflation was recorded at 3.16 percent in June 2015, unchanged from the previous month of May 2015.
Analysts said the reading remained lower than the consensus estimates as perishable food inflation remained surprisingly lower than indications given by SPI numbers.
In the fiscal year 2015, average inflation has trimmed down to the decade low level of 4.53 percent compared to 8.62 percent in 2014. Food inflation during fiscal 2015 clocked in at 2.5 percent as compared to 8.2 percent in 2014. This figure was according to the government’s revised estimates of having inflation during the fiscal under review around five percent.
“The slower increase in food inflation is due to weak prices of major consumable food items like wheat, rice, chicken, edible oil and vegetable ghee,” said analyst khurram Mohiuddin at Taurus Securities. “In addition, inflationary pressures also eased off after the fall in crude oil and other commodities prices in international market.”
Mohiuddin said government budgetary measures, which are aimed to improve revenues and reduce subsidies, and expected rise in energy prices could bring a fresh wave of cost-push inflation in coming months.
“However, monthly CPI reading is likely to take another dip in July 2015 to below 3.0 percent due to high base in July 2014 and stable fuel prices this month,” he added.”
Furthermore, impact of low crude oil prices, which tamed inflation last year, is likely to phase-out, as favorable base effect would start vanishing in coming months. For FY16, inflation could be around 6.0 percent.”
Pakistan, frequently battled volatile prices, is a long way from worrying about deflation, but under government pressure to revive flagging growth the central bank cut policy rates thrice last fiscal, acknowledging a deficit cutting roadmap set by the government in the 2015/16 budget.
Many economists see at least one more rate cut in 2015, but some fear retail inflation could accelerate in coming months on a possible seasonal rise in food prices.
During June 2015, food inflation inched up a little to 2.41 percent from 2.22 percent in May 2015 and record low of -1.05 percent in April 2015.
The PBS monthly bulletin revealed that alcoholic beverages and Tobacco prices decreased to 17.54 percent from previous month (May2015) of 20.26 percent.
In the month under review, utilities charges (housing, water, electricity, gas and fuel) were up by 4.85 percent.
Health and education became dearer by 3.33 percent and 9.57 percent, respectively.
Prices of clothing and footwear went up by 5.6 percent, and furnishings and household equipment maintenance 3.67 percent.
Charges related to recreation and culture went up 2.25 percent and restaurants and hotels 4.39 percent in June over the same month in 2014. However, transportation fares were down negative 8.57 percent.
In June 2015, core Inflation, excluding food and energy costs, stood at 4.6 percent in as compared to 5.9 percent in the previous month and 8.7 percent in June 2014.
The wholesale price index, on a year-on-year basis, dropped 2.0 percent in June 2015 as compared to 1.8 percent decrease a month ago and increase of 7.7 percent in June 2014.
The sensitive price indicator, which gauges weekly-based inflation in kitchen items, increased 1.1 percent in June 2015 year-on-year, as compared to 1.2 percent fall a month ago and 6.2 percent rise in June 2014.
According to the figures, during June 2015 potatoes prices increased by 32 percent, tomatoes 23 percent, chicken 15 percent, cigarettes 13.45 percent, Beasan 8 percent, pulses 7 percent, sugar 5 percent and eggs and mash pulse 4 percent each over previous month.
Year on year, tomatoes prices up by 80 percent, onions 43 percent, pulse gram 26 percent, besan 23 percent, mash pulse 21 percent , chicken 20 percent, cigarettes 18 percent, sugar 13 percent, tea 12 percent and vegetables 10 percent over same month of last year. Besides, motor vehicle tax and tailoring also increased by 37 percent and 11 percent respectively.