Pakistan - Inflation Eases to 20.52 per cent

ISLAMABAD: Pakistan’s inflation eased to 20.52 per cent in January 2009 from a three decade high owing to a slight deceleration in food prices, suggested data of Statistics Division.

The inflation measured through Consumer Price Index (CPI) decelerated in the month under review from 23.34 per cent in December 2008 on the back of a decrease in perishable and non-perishable items coupled with stable oil prices in the past month.

 

The downward trend in inflation began in October 2008, when it touched an all time high of 25 per cent. The government has estimated a yearly target of 20 per cent by the end of June 2009 from its earlier projected target of 12 per cent.

The central bank increased its benchmark interest rate five times in the last 18 months to tame core-inflation (non-food non-energy) but it still remained on the higher side, indicating that this policy did not yield the required results.

The SBP kept its benchmark rate unchanged at 15 percent in its monetary policy announced on December 31 last, which will be followed by another announcement in April. 

Statistics showed that core inflation slightly increased to 18.9 per cent in January from 18.8 per cent in December. 

Core inflation is rising on account of surging house rents and sub-indices related to medical care. The house index rent rose by 18.21 per cent and medical care cost by 14.36 per cent.

Advisor to Prime Minister on Finance and Revenue Shaukat Tarin said that the core-inflation would start downward trend when the headline inflation reached to around 18 percent in the next few months.

He said that the core inflation remained stubborn due to the rising house rent. However, he claimed that the measurement methodology of the core inflation would remain unchanged.  

Food inflation was up by 21.61 per cent in January 2009 over the same month last year. However, the food inflation dipped by 2.04 per cent during the month as compared to the previous month of December 2008.

Food inflation has started a downward trend after reaching an all time high of 35 per cent in October 2008. However, it is feared that the substantial increase in sugar and wheat prices might reverse the downward trend.

Prices of non-perishable food items witnessed a decrease of 0.60 per cent and perishable items 12.26 per cent in January 2009 over the previous month of December 2008.

Despite substantial decline in oil prices, the transport fares soared by 25.22 per cent in January 2009 over the same month last year. The cost of text books and tuition fees also increased by 17.06 per cent in the month under review over the last year.

The statistics showed that the inflation measured through sensitive price index - a weekly indicator - was up by 20.75 per cent in January 2009 compared to 16.28 per cent in the same period last year.

The inflation in the wholesale manufactured products also witnessed increase by 15.69 per cent compared to 15.53 per cent over the same month last year.

by Mubarak Zeb Khan (source: http://dawn.net)