July CPI likely at 12.34%

KARACHI: The Consumer Price Index (CPI), the key indicator of inflation, likely rose by 12.34 per cent year-on-year in July, a slower rise than in June, thanks to a high base effect, according to a Reuters’ poll.

July consumer prices were seen rising 12.34 per cent from a year earlier, according to the median of a survey of 10 analysts and economists. The CPI rose by 12.69 per cent in June.

The Federal Bureau of Statistics is due to release CPI data on, or soon after, Tuesday.

The central bank has maintained a tight monetary policy and raised the key policy rate by 50 basis points to 13 per cent last month to reinforce its fight against inflation and a widening fiscal deficit.

But inflation is likely to be higher in coming months because of serious floods which began at the end of last month.

“Inflation is likely to rise further due to the loss of crops and devastation caused by the floods,” said Asif Qureshi, Director at Invisor Securities Ltd.

The government said it was assessing the damage but it would be substantial, especially in the agriculture sector. Analysts also said prices usually rise in Ramazan which is due to begin this week.

Published in The Express Tribune, August 11^th, 2010.