February CPI seen at 14.1 per cent

Lower food prices help ease inflation.

KARACHI:

Annual consumer price inflation in the country was likely at 14.10 per cent in February, as food prices remained low and the government was absorbing most of the impact of higher world oil prices, a Reuters poll showed on Tuesday.

A higher base effect from last year also likely helped a marginally slower rise in the consumer price index (CPI) in February, after it rose 14.19 per cent in January from a year earlier.

“It seems that the government’s and the central bank’s patience with the inflation rate is finally beginning to pay off, as the high base from last year starts to take effect this quarter,” said Invest and Finance Securities Director Khalid Iqbal Siddiqui.

Analysts said the weekly sensitive price indicator, or SPI, had also started easing, thanks mainly to food prices retreating in 2011. About two-third of the impact of a higher international petroleum price had yet to be passed on to consumers, which had helped control inflation, they said.

“If the full impact of fuel prices had been passed on during the month, the February CPI would have been estimated at 14.8 per cent year-on-year,” said Siddiqui, who had forecast February CPI at 13.6 per cent.

Analysts said steady inflation meant the central bank was likely to keep its policy rate unchanged again when it announces the next monetary policy by the end of the month.

Published in The Express Tribune, March 9^th, 2011.