Inflation falls to 12-year low at 1.6 percent

ISLAMABAD: Pakistan’s headline inflation has been falling continuously and for October 2015, it clocked in at 1.6 percent, the lowest reading in the last 12 years, Pakistan Bureau of Statistics (PBS) reported on Monday.

Since the beginning of the financial year in July, Consumer Price Index (CPI) inflation has been below two percent. In September 2015, inflation was recorded at 1.3 percent, and 5.82 percent in October 2014.

The Whole Price Index (WPI) was recorded at minus 2.66 percent in October 2015 against a decrease of 3.5 percent in the previous month (September) and an increase of 1.3 percent in October 2014.

Economists say that as the WPI is in negative, it will affect the CPI inflation in months to come and will further bring it down; which they believe is harmful for the economy.

Average inflation of four months (July-October) stood at 1.65 percent as against 7.09 percent in the same period last year.

As the inflation and aggregate demand falls so does the growth in sales tax collection at the domestic stage, which hurts the industrial production and indicates a shrinking economy, an economist said.

In October 2015, core inflation, excluding food and energy costs, stood at 3.4 percent compared to 7.8 percent in the same month a year ago.

Food and non-alcoholic inflation – carrying more than one-third weight in the CPI basket – was down 0.42 percent in October over the same month last year.

Charges of utilities (housing, water, electricity, gas and fuel) were up 5.32 percent. Health and education became dearer by 2.7 percent and 8.75 percent, respectively. Prices of clothing and footwear went up 5.11 percent, and furnishings and household equipment maintenance 3.86 percent in the month under review.

Charges related to recreation and culture rose 2.2 percent and restaurants and hotels 4.33 percent in October over the same month in 2014. However, transportation fares were down by negative 14.18 percent.

Historically, inflation averaged at 7.99 percent from 1957 until 2015. It was recorded at all time high of 37.81 percent in December 1973 and a record low of minus 10.32 percent in February of 1959.

The sensitive price indicator, which gauges weekly-based inflation in kitchen items, decreased by 0.1 percent in October year-on-year, as compared to a decrease of 1.3 percent a month ago and an increase of 4.1 percent in October 2014.

On month-on-month basis, price of tomatoes increased 34 percent, mash pulse 16 percent, potatoes 10 percent, onion and gram pulse by 5.4 percent each, besan 4.4 percent, gram whole 3.3 percent, wheat 3.2 percent, wheat flour 2.2 percent and moong pulse by two percent over the previous month. However, chicken price was down by nine percent, whereas egg and sugar and rice decreased by four percent each.

Year on year, prices of pulse gram were up 56 percent, Besan 46 percent, mash pulse 36 percent, onions 30 percent, tea 25 percent, gram whole 20 percent, tomatoes 17 percent, and cigarette 16 percent over the same month last year.

Besides, prices of potatoes were down 55 percent, cooking oil 17 percent, and rice, chicken and eggs decreased by 16 percent each, whereas vegetable oil price fell by 13 percent over the same month last year.

Source: The NEWS