In view of the sharply lower inflation, the State Bank of Pakistan cut the discount rate by 100 basis points to 8.5% in its fresh monetary policy. STOCK IMAGE
ISLAMABAD: The pace of increase in prices of essential commodities remained at an 11-year low for the third consecutive month, as inflation rose only 3.9% in January, reported the Pakistan Bureau of Statistics (PBS) on Monday.
The slowdown in the price increase was noted both in food and energy products – the two main groups that have a majority of the commodities in the Consumer Price Index (CPI).
The CPI rose 3.88%, to be precise, said the national data collection agency. The indicator tracks price movements of 481 commodities every month.
The Wholesale Price Index decelerated in January and rose only 1.03%, indicating the crash in factory-gate prices would translate into a further reduction in retail prices in the months ahead.
The inflationary pressures seemed to be easing out, as the fuel- and food-adjusted inflation, known as core inflation, also slowed down to 6.4% on a year-on-year (YoY) basis in January, a reduction of 0.3% over previous month.
Core inflation that is given more importance by economists was 8% in January last year.
In view of the sharply lower inflation, the State Bank of Pakistan cut the discount rate by 100 basis points to 8.5% in its fresh monetary policy.
According to the PBS, in January the food and non-alcoholic beverages group rose 3.9% YoY. The index had been recorded at 3.4% in December.
In January, there was an increase of 2.13% in prices of non-perishable food items while rates of perishable food items increased only 2.1% over a year ago.
On a YoY basis, tomato prices decreased one-third, onion prices fell over 28%, tea prices declined 15.5%, kerosene oil dropped 9.3% and motor fuel fell over 6%.
In January, potato prices recorded the major increase of 49% in comparison to the previous year.
Average inflation in the first seven months of the current fiscal year (July-January) rose 5.8% as compared to the same period of previous year, according to the PBS.
For the current year, the government has set the inflation target at 8%, which is expected to be achieved on the back of reduced commodity prices.
On a monthly basis, the CPI-based inflation increased only 0.08% in January over December. Prices of food items, non-alcoholic beverages and tobacco also decelerated.
Prices of clothing and footwear remained constant, which was an unusual phenomenon. Rates of housing, water, electricity, gas and other fuels increased 1.42% in January over the previous month. Transport charges rose 0.27%, while the communications group decelerated in January over the previous month.
Published in The Express Tribune, February 3rd, 2015.
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Policy makers do not go to the markets and purchase these commodities, therefore, they have no idea of ground realities and the sufferings of the middle and lower class. For example, open milk is being sold at Rs. 110/- and Rs. 120/- per litre whereas tetra pak milks (Nestle and Olpers) are being sold at Rs. 120/- per litre; Yoghurt at Rs. 120/- per Kg; Similarly, price of nan (roti) has gone up from Rs. 8 to Rs. 10 and the list goes on. I firmly believe that the ruling class and the policy makers will never change their attitude unless, we, the civil society jointly and collectively takes a stand against all policies having adverse effects on the citizens of this country.
Well, like everything prices of commodities are being imported from foreign countries, we are living in Pakistan, don’t fool peoples, price index is calculated keeping in view previous prices, if previous prices are hiked then sensible Pakistan could detect decrease easily, I can quote just one example from market i.e. cauliflower has never lingered at rate Rs 20-25/kg at its glut period, but it stayed at this rate and could not be brought down even during peak season, even same could be true for pea