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Tuesday March 19, 2024

CPI inflation clocks in at 4pc in February; downward trend expected 

By Israr Khan
March 02, 2016

ISLAMABAD: Pakistan’s consumer price index (CPI) inflation clocked in at 4.02 percent year-on-year in February due to low-base effect, but downward trend is expected due to falling oil prices. 

The Pakistan Bureau of Statistics (PBS) said on Tuesday the year-on-year (YoY) CPI inflation stood at 3.3 percent in January and 3.2 percent in February 2015.

Food inflation, which constitutes around 35 percent of the total CPI, was up 2.47 percent YoY in February as against an increase of 2.41 percent in January. 

However, CPI inflation declined 0.3 percent month-on-month (MoM) in February as compared to an increase of 0.21 percent in January. 

On MoM basis, food inflation was down two percent in February as against an increase of 0.5 percent in January.

“We expect inflation to peak at around four percent in March after which it may come down to 2.5 to three percent by Jun 2016, resulting in FY16 period average of only 2.8 percent,” analyst Saad Hashemy at Topline Securities forecast. 

The central bank forecast average inflation for the current fiscal year of 2015/16 between three to four percent, keeping the in view the benign outlook of commodity prices, expectation of moderate pickup in domestic demand. 

Downward pressure on CPI is expected due to falling oil prices and almost excess food stocks (wheat, rice and sugar) in the local markets.

“We continue to expect the SBP to further cut the policy rate by 50 basis points to 5.5 percent during 2016,” Hashemy said. “(However), energy price hike and/or reversal in commodity price trend remain the key risks that can adversely affect the inflation outlook.”

The PBS data showed that average inflation for July-Feb stood at 2.48 percent as against 5.45 percent in the same period of the last year. 

In February, core inflation, excluding food and energy costs, increased 4.5 percent year on year basis as compared to increase of 4.3 percent in the previous month and 6.2 percent in February 2015. 

Education charges became dearer by 9.22 percent and charges of utilities (housing, water, electricity, gas and fuel) were up 5.1 percent and medicare (health) was costlier by 3.96 percent. 

Prices of clothing and footwear went up 4.9 percent, and furnishings and household equipment maintenance 4.34 percent in the month under review.

The PBS said charges related to recreation and culture rose 2.5 percent and restaurants and hotels 5.35 percent in February over the same month in 2015. However, transportation fares were down 0.76 percent.

Sugar prices increased 4.3 percent MoM, while chicken prices declined 20pc, potatoes 12pc, onion 8pc, tomatoes 7pc and fish and besan three percent over the previous month.  

In February, water supply charges were up five percent, medical test 2.3pc, household servants 2pc, and doctor clinic fee 1.4 percent. 

Year on year, prices of onions increased 77pc, mash pulse 53pc, gram pulse 50pc, besan 45pc, tea 30pc, cigarettes 27pc, whole gram 23pc and sugar 15pc while prices of betel leaves and nuts increased 11 percent in the month under review over the same month of last year.

In February, tomatoes prices were down 33pc, potatoes 25pc, rice 14pc, cooking oil 14pc, chicken 11pc, vegetable ghee 9pc over Feb 2015.