Inflation slows to 11-year low, naan still out of reach for many

ISLAMABAD: Amid concerns over deflation that -- according to one school of thought -- has already begun, inflation rose 3.2% in retail markets in February compared to last year, the Pakistan Bureau of Statistics (PBS) said in a report released on Monday.

Inflation, as measured by the Consumer Price Index (CPI), remained at an 11-year low for the fourth consecutive month, at 3.24%, the national data collecting agency said. The CPI indicator tracks prices of 481 commodities every month in the retail market.

Read: Consumer Price Index: Inflation at 11-year low for third month in a row

The marked slowdown in inflation sparks expectations of a further cut in the discount rate. The State Bank of Pakistan (SBP) slashed the discount rate by 100 basis points to 8.5% in its last monetary policy announcement. Some board members were in favour of at least a 150-basis-point reduction, but the finance secretary, who is also a board member, supported a 100-basis-point reduction.

Read: Deflationary pressure - Consumers see further dip in inflation, reveals survey

The Wholesale Price Index that captures prices in the wholesale market decelerated for the third consecutive month and clocked in at negative 3.4% in February over the February last year, PBS said. According to independent economists, the impact of reduction in prices in the wholesale market appears in the retail market with a lag of about six months.