January inflation ticks up to 3.32pc

ISLAMABAD: Consumer price inflation (CPI) rose to 3.32 percent year-on-year in January, within the range of 3 to 4 percent as forecast by the central bank, from 3.19 percent in December, marking the highest rate since January 2015, the Pakistan Bureau of Statistics (PBS) data showed on Monday.

Analysts said the increase in inflation number in January 2016 was primarily due to the low base effect of the last year when “inflation collapsed during the fourth quarter of the fiscal 2014 on the back of lower commodity prices driven by low oil prices.”

“Food, whose weight is almost 35 percent on the CPI index, declined on monthly basis by 0.72 percent and was primary reason for the low inflation number,” analyst Saad Hashemy at Topline Securities said in a comment.

“Given above inflation outlook, we continue to expect the central bank can further reduce policy rate by 50 basis points to 5.5 percent during 2016.”

Hashemy said a hike in energy price or any reversal in global commodity prices, however, remain key risks “that can adversely affect inflation outlook.”

The State Bank of Pakistan already took stock of the situation as it guided its interbank rate to neutral in the monetary policy review last week.

The PBS data showed that inflation had been continuously falling since the start of the current fiscal year and touched the lowest mark of 1.32 percent in September last since 2003. The data showed that on a month-on-month basis, prices rose 0.2 percent in January from December 2015.

Seven-month (July-Jan 2015/16) average CPI inflation stood at 2.26 percent against 5.77 percent in the same period last year.

In January, core inflation, excluding food and energy costs, increased 4.3 percent year on year basis as compared to increase of 4.1 percent in the previous month and 6.4 percent in January 2015. Food and non-alcoholic inflation – carrying more than one-third weight in the CPI basket – was up 1.21 percent in January over the same month last year.

Education charges were dearer by 8.8 percent and charges of utilities (housing, water, electricity, gas and fuel) were up 5.01 percent. Health and education became dearer by 2.53 percent and 8.81 percent, respectively. Prices of clothing and footwear went up 4.68 percent, and furnishings and household equipment maintenance 3.75 percent in the month under review.

Charges related to recreation and culture rose 2.2 percent and restaurants and hotels 4.99 percent in January over the same month in 2015. However, transportation fares were down by negative 1.8 percent.

On month-on-month basis, sugar prices increased six percent, fresh fruit 5pc, chicken 3pc, mash pulse 3pc, tea 2pc and fish, gram pulse and dry fruits one percent each.

However, tomatoes prices were down 38pc, potatoes 29pc, onion 14pc, vegetables 5pc and egg and cooking oil one percent each over the previous month.

During the month under review, water supply charges and house rent were up two percent each, while kerosene oil price was down 3.6 percent over the previous month. 

Year on year, prices of onions increased 80pc, mash pulse 53pc, gram pulse 52pc, besan 50pc, tea 32pc, cigarettes 27pc, whole gram 24pc, betel leaves and nuts 12pc and sugar also became dearer by 11pc in January over the same month of last year.

In Jan 2016, potatoes prices were down 29pc, tomatoes 27pc, rice 16pc, cooking oil 15pc, egg 14pc, vegetable ghee 11pc and vegetables prices were reduced 10pc over Jan 2015.

The official data showed that the whole price index was recorded at minus 0.1 percent in Jan 2016 against a decrease of 0.4 percent in the previous month (December 2015) and a decrease of 2.4 percent in Jan 2015.