CPI seen up at 14.95%

Pakistan’s CPI could reach a 17-month high because of an increase in food prices.

ISLAMABAD: Pakistan’s consumer price index (CPI) could reach a 17-month high because of an increase in food prices following the country’s massive floods, a Reuters poll shows.

September consumer prices rose by 14.95 per cent from last year, according to a survey of 12 analysts and economists. The CPI rose by 13.23 per cent in August, a four-month high. The Federal Bureau of Statistics is due to release inflation data on or after Monday.

The central bank has maintained a tight monetary policy and raised the key interest rate to 13.5 per cent from 13 per cent last week, its second consecutive hike, in a bid to curb the country’s deepening fiscal deficit and combat rising inflation.

Inflation for the fiscal year ending June 30 could be between 13.5 per cent and 14.5 per cent, according to the central bank, compared with an original target of 9.5 per cent. The International Monetary Fund has projected that Pakistan’s inflation will accelerate to 13.5 per cent this fiscal year.

Analysts said the main reason for the rise would be an increase in food prices and that inflation is likely to rise further.

Published in The Express Tribune, October 8^th, 2010.