October inflation at 22-month low

[LahoreEstate]

KARACHI: Pakistan’s consumer price index (CPI) rose 8.87 per cent in October, the slowest pace in 22 months, but analysts said inflation is likely to rise at a faster pace in coming months.



The CPI, a key indicator of inflation, was up 0.95 per cent over September, the Federal Bureau of Statistics said on Wednesday.



The year-on-year October rise in the CPI was the slowest since December 2007.



‘This is probably the last month of a low CPI this fiscal and it is likely to grow at a faster pace from next month as the impact of the high base will start to reduce,’ said Khalid Iqbal Siddiqui, director at Invest and Finance Securities.



Inflation peaked at a record high of 25.3 per cent in August 2008 because of higher commodity and oil prices before easing in 2009.



‘For next month, the number is likely to be 9.5-10 per cent and from December onwards it would probably be even higher due to the base effect as well as current high price trends,’ said Siddiqui.



The October numbers may encourage the central bank to cut its policy rate by 50-100 basis points in a monetary policy review later this month, analysts said.



However, they said the rate cut may be the last one for the 2009/10 fiscal year (July-June) as higher inflation will limit the chances of further easing.



The central bank, the State Bank of Pakistan, in September kept its policy rate unchanged at 13 per cent for October and November amid fear of fiscal slippages and concern that inflation may not have peaked.



Meanwhile, the wholesale price index (WPI), another indicator of inflation, rose in October by 3.83 per cent from a year earlier, according to date from the statistics bureau.



Using 2000/01 as the base year, the CPI index stood at 209.11 against 207.14 in September, while the WPI index stood at 215.01 in October against 212.53 in September.— Reuters

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