Impact of high electricity, food prices: CPI grows by 13.02% in Feb

[Lahore_Real_Estate]

By Tanveer Ahmed

KARACHI: Consumer price index (CPI), the key indicator of inflation rose by 13.02 percent in the month of February of the current fiscal year due to increased electricity and energy prices and food prices.

Federal Board of Statistics (FBS) reported on Thursday that in July-Feb 2009-10, CPI also increased 11.08 percent over the corresponding period of last year.

The month of February numbers also fell in line with the expectations of analysts and economists, which estimated CPI to settle 13.02 percent to 13.05 percent in the month under review.

Though, CPI grew 13.04 percent in the month of February, its growth was curtailed a bit when compared to the month of January, while the same rose 13.68 percent, which analysts believed was caused by the removal of subsidies on the recommendations of the International Monetary Fund (IMF).

Analysts said that the despite easing of the growth in CPI in the month of February, it is still posing threats to projections of the government that plans to bring it down to single digit for the current fiscal.

An IMF emergency loan package of $7.6 billion agreed in November 2008 helped avert a balance of payments crisis and shore up reserves. The loan was increased to $11.3 billion in July last year.

“Electricity, gas, and petroleum product prices increased substantially in the January-February period and this led to a surge in the inflation level to settle above 13 percent level”, analysts noted.

They also opined that though the government reduced the petroleum prices in March, but marginally, and impact of substantial prices in these products for the last two months would have its impact in the coming days.

About the new review of the monetary policy at the end of this month, they forecast that policy discount rate is most likely to be unchanged because the inflation has not substantially dropped as the government was foreseeing.

During February current fiscal, food inflation went up almost 15 percent with non-perishable items prices increasing 15.24 percent and perishable items prices 12.52 percent.

Fuel & lighting index increase 17.17 percent during the month and house rent index was up 12.73 percent. Transport & communication expenses increased 10.38 percent and education expenses rose 12.93 percent in the said month.

During the month of February, Sensitive Price Index and Wholesale Price Index also increased 18.01 percent and 19.29 percent respectively over the same month of last year.