CPI-based inflation up by 7.9% in January

CPI-based inflation up by 7.9% in January
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KARACHI: The Consumer Price Index (CPI)-based inflation increased by 7.9 percent in January 2014, however, the increase was lower when compared with 9.2 percent in the previous month and 8.1 percent in January 2013, Pakistan Bureau of Statistics (PBS) revealed on Monday.
The reading is lowest since October 2013 while CPI-based inflation, on monthly basis slumped by 1.3 percent in January 2014 as compared to the previous month and 0.2 percent when compared with January 2013. 
During the month under review, the Wholesale Price Index (WPI) increased by 0.53 percent, while Sensitive Prices Index (SPI) decreased by 1.22 percent.
The food items that witnessed an increase in the prices during January 2014 over December 2013 included chicken 20.25 percent, fresh vegetable 8.37 percent, fresh fruits 3.38 percent, beans 2.38 percent, milk powder 2.07 percent, pulse masoor 1.99 percent, honey 1.29 percent, pulse moong 1.57 percent, dry fruit 1.43 percent, readymade food 1.29 percent, wheat products 1.08 percent and meat 1.01 percent.
The food items that witnessed decrease in the prices during January 2014 over December 2013 included potatoes 26.32 percent, onion 23.92 percent, tomato 12 percent, eggs 8.77 percent, sugar 4.06 percent, tea 3.58 percent, jaggery 2.91 percent and pulse gram 10.9 percent.
The non-food items that witnessed increase during the month included woollen readymade garments 4.13 percent, house rent 2.14 percent, firewood 1.91 percent, sewing needles and dry cell 1.44 percent, water supply 1.39 percent and woollen cloth 1.26 percent.
Core inflation measured by non-food and non-energy CPI increased by 8.0 percent on yearly basis in January 2014 as compared to 8.2 percent in December 13. While on monthly basis, it increased by 1.0 percent in January 2014 as compared to 0.2 percent a month earlier and 1.2 percent in January 2013.
Core inflation, measured by 20 percent weighted trimmed mean CPI (Core Trimmed) increased by 8.2 percent in January 2014 and by 8.7 percent in December 2013, which increased by 9.9 percent in January 2013. Core Trimmed inflation has increased by 0.6 percent in January 2014 as compared to 0.4 percent in December 2013 which increased by 1.0 percent in January 2013.
Incorporating aforementioned inflation reading, BMA Capital Management’s analyst expects average inflation for FY14 to hover around 9.2 percent with June-end inflation to clock in at 10-10.5 percent.
Top Line Securities’ analyst said in a report that despite a substantial decline in the inflationary numbers, we reiterate our call of ‘status quo’ on interest rates at least for the remaining of FY14. A swing factor would be timely realisation of the foreign flows that are likely to arrest pressures on the country’s external account and thus, impart stability to the rupee, he added.

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