CPI inflation up by 4.94pc in March: Asif Bajwa


Muhammad Arshad


The Pakistan Bureau of Statistics (PBS), Monday, announced that the Consumer Price Index (CPI)-based inflation rose 4.94% in March 2017 compared to the same month of previous year.
Average CPI-based inflation in three quarters of the current fiscal year (July-March) increased 4.01% compared to the same period of previous year. On a month-on-month basis, the inflation was recorded at 0.84% in March compared to February 2017,
Therefore, prices of food items Tomatoes (68.43%), Chicken (21.6%), Onion (18.16%), Potatoes (15.48%), Fresh Fruits (12.52%), and Tea (5.1%) and prices of the food items decreased Eggs (21.34%), Pulse Gram (8.06), Besan (4.49%), Sugar (4.39%), Pulse Masoor (4.16%), Gram whole (4.02%), Pulse Moong (3.66%), Pulse Mash (3.54%), and Gur (2.35%).
Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 5.3% on (YoY) basis in March 2017 as compared to increase of 5.3% in the previous month and 4.7% in March 2016. On (MoM) basis, it increased by 0.1% in March 2017 as compared to increase of 0.2% in previous month, and an increase of 0.2% in corresponding month of last year i.e. March 2016.
Core inflation, measured by 20% weighted trimmed mean CPI (Core Trimmed) increased by 4.5% on (YoY) basis in March 2017 as compared to 4.1% in the previous month and by 3.8% in March 2016. On (MoM) basis, it increased by 0.2% in March 2017 as compared to an increase of 0.2% in the previous month and an increase of 0.2% in corresponding month of last year i.e. March 2016
“The sequential (month-on-month) rise in inflation was recorded on the back of 12.5% increment in perishable food prices (weight 4.99%) and (rise in) non-perishable food prices (weight 29.84%),” said that Chief Statistician Asif Bajwa while presenting the monthly inflation figures related report here at a press conference on Monday. “Though the uptick is nominal in non-perishable food prices, due to its weight in the CPI, the segment contributed 0.14 percentage point to the monthly inflation.”
PBS records retail and wholesale prices of a basket of essential goods and services and computes the CPI and Wholesale Price Index (WPI) every month. However, the Sensitive Price Indicator (SPI) is calculated on a weekly basis. WPI rose 0.84% in March, while SPI advanced 1.8%. Non-food and non-energy inflation, called core inflation, stood at 5.3% in March 2017 compared to 3.8% in the corresponding month of previous year.
“Noticeably, WPI has been on an upward trajectory for the past three months, which in our view would impact the revision in house rent in April 2017 and construction wage rates,” Taurus Research said. Furthermore, seasonal impact on the education index would also keep CPI on the higher side in April.
“Weekly SPI reported diluted pressure of certain food items and the trend is important to contain inflation in the 4QFY17,” it said.“However, prices of general food items tend to build up as Ramazan approaches and we expect 4QFY17 CPI to average at 5.4% year-on-year, which would take FY17 inflation to 4.3% YoY; in line with SBP’s forecast of close to 4%.”
Other factors that would push food inflation were re-opening of Afghanistan border that was expected to create temporary supply glitches in the local market and increased meat supply to Dubai markets after the latter imposed a ban on Brazilian meat, the research house said.
The government allowing sugar exports at a time when demand is inflated is also likely to contribute to the increase in food inflation. On a year-on-year basis, top 10 items that recorded an increase in their prices in March 2017 included tomato 68.43%, green chilli 36.22%, chicken 21.6%, onion 18.06%, potato 15.48%, apple 12.69%, banana 10.65%, tea 8.04%, iron bars 2.99%, petrol 2.48% and diesel 1.89%.
The top 10 items that showed a decrease in their prices included egg farm 21.34%, peas 18.52%, cucumber 15.12%, gram pulse 8.06%, black gram 7.69%, masoor pulse (whole) 5.05%, gas cylinder 4.82%, gram flour 4.5%, sugar refined 4.39% and masoor pulse (washed) 3.78%.
“Based on our 12-month moving average inflation forecast, we expect the Monetary Policy Committee to consider policy rate hike in 2HCY17 where we do not rule out extended delay based on 2018 being the election year and the fact that the committee may resort to negative real interest rate spread to boost GDP, which was last seen in 2005.”

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