Food inflation rose significantly to 9.4 percent during April 2007 against 3.6 percent in April 2006, mainly due to reversal of inflation from negative to positive in some key food items including vegetables, fruits, eggs and chicken.
The State Bank of Pakistan (SBP) issued inflation monitor for April 2007, which showed that non-food inflation had declined to 5.2 percent during the month from 8 percent in corresponding month of last year.
The SBP inflation monitor report said that general consumer price index (CPI) inflation increased to 6.9 percent in April 2007 on year-on-year (YoY) basis from 6.2 percent as registered in the same month of last year. This higher CPI inflation was mainly attributed to strong food inflation that muted the effect of declining non-food inflation, the report said.
The SBP has fixed inflation target at 6.5 percent for the fiscal year 2006-07. Therefore, 6.9 percent inflation during April was at a higher level than the target for FY07.
Core inflation, based on non-food non-energy (NFNE), declined to 5.2 percent in April 2007 from 6.4 percent in April 2006 on YoY basis, whereas core inflation based on 20 percent trimmed-mean showed a marginal increase from 6.0 percent in April 2006 to 6.1 percent in April 2007.
The bottom line was that the declining trend in non-food inflation this year had been counterbalanced by the rising trend in food inflation, with the result that CPI inflation remained at a higher level than the target for FY07, the report said.
It said that wholesale price index (WPI) inflation, that remained on a rising trend during FY06, started to decline from the beginning of FY07 and this decelerating trend continued over the subsequent months of the current fiscal year. Wholesale price index (WPI) inflation declined to 6.0 percent in April 2007 on YoY basis from 8.1 percent in the corresponding month of last year.
This significant decline in WPI inflation was due to a sharp deceleration in non-food inflation during April 2007 compared to the corresponding month last year. Sensitive price indicator (SPI) increased to 7.7 percent in April 2007 on YoY basis from 6.4 percent in same month of last year, the report added.
On monthly basis, out of 124 food items, 52 items showed decline or no change, 55 items showed increase up to 10 percent increase out of which only one item, kinnu, showed 98 percent increase.
As compared to March 2007, during April 2007 there was marginal increase in average price of food items like wheat flour, fresh milk and vegetable ghee and beef, whereas prices of sugar and onion showed decline, the price of beef remained same, the report said.
However, there was a significant decrease in the prices of green chillies by 31 percent, eggs by 28 percent and onion by 42 percent during April 2007 as compared to the same month of last year.
The report said that non-food inflation decreased from 5.5 percent in March 2007 to 5.2 percent in April 2007. This marginal decline in non-food inflation was primarily due to decrease in almost all the sub-groups of non-food group. These groups were house rent, fuel & lighting, furniture & equipment, transport & communication, education, recreation & entertainment, education, cleaning and laundry & personal appearance and medicare groups of non-food group.
City-wise inflation data of SBP indicated that 23 cities out of 35 were found in the category of high inflation cities and the inflation recorded for all cities depicted a lower level of CPI inflation (YoY) as compared to their relative positions in the previous month in all three categories.
Gujranwala with 10.2 percent and Loralai with 4.3 percent general CPI inflation maintained their positions of experiencing the highest and the lowest CPI inflation on YoY. Moreover, Islamabad depicted a decline in its inflation trend from 9 percent to 8.1 percent maintaining its 10th rank among 35 cities, while Karachi was on 25th ranking with 6.5 percent.
Larkana and Kunri shifted to low inflation cities with CPI (YoY) inflation of 6.2 and 5.6 percent respectively. Quetta shifted back to the category of high inflation cities with CPI (YoY) inflation of 7.9 percent as for the last month contrary to its conventional trend the city was found in the category of low inflation cities.