Prices up by 13.2 per cent

CPI increased 13.23 per cent in August compared with the same period last year.

ISLAMABAD: The Consumer Price Index (CPI), a key indicator to measure the change in prices of goods and services, increased 13.23 per cent in August compared with the same period last year, according to the Federal Bureau of Statistics (FBS), as the aftermath of the floods has started leaving fingerprints on the prices of essential items.

On a monthly basis, inflation in August rose by 2.51 per cent over July, indicating that the dangerous trend of price hike is likely to continue in coming months.

Setting a record, all 10 groups of the commodities and services included in the basket of goods that make up the CPI have shown a price increase in August compared with the same period last year.

The ‘food and beverages’ group, which carries a weight of 40.34 per cent in calculation of the index, increased by 15.62 per cent in August, reported the FBS. Within the ‘food and beverages’ category, the prices of perishable food items skyrocketed by 41.21 per cent.

Compared with the preceding month of July, rates of perishable food items increased by 30 per cent. The FBS reported that in just one month, the price of vegetables went up 32.3 per cent, eggs 19 per cent, fresh fruits 18 per cent and sugar 10.10 per cent.

Finance ministry analysts termed the collapse of the magistrate system and break-up of the food supply chain due to the worst floods to hit the country the main reasons behind the price surge.

The government has forecast that inflation may surge to 25 per cent this fiscal year, 100 per cent more than its revised projection as a consequence of floods.

The numbers have validated the State Bank’s concern of rising inflation.

Meanwhile, ‘house rent’ – with a weight of 23.34 per cent in the commodities’ basket, increased 8.23 per cent and fuel and lighting rates went up 21.3 per cent compared with August last year.

Prices of apparels, textiles and footwear surged 10.22 per cent, while the cost of transport and communications soared 14.3 per cent, recreation and entertainment 14.5 per cent and education 7 per cent, also on a yearly basis.

The latest statistics on the back of the devastating floods will complicate policy options for the authorities. Due to rising demand and shrinking supply, the rates of essential food items are expected to go up further, according to the finance ministry.

Published in The Express Tribune, September 10^th, 2010.