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Inflation edged up to 4.12pc in July

Inflation edged up to 4.12pc in July

ISLAMABAD: Pakistan’s annual inflation rose to 4.12 per cent in July from 3.19pc in the preceding month, the Pakistan Bureau of Statistics said on Monday.

The main inflation is measured by Consumer Price Index (CPI), which tracks prices of nearly 500 commodities every month across the country. The index went up by 1.3pc in July as compared to the increase of 0.6pc in the previous month and 0.4pc in July 2015.

The government has projected the annual inflation target at 6pc for the current fiscal year. Average annual inflation was 2.86pc in the previous fiscal year.

The food group, which has a weight of 37pc in the CPI basket, showed an increase of 4.7pc in July on a year-on-year basis on the back of 14pc increase in prices of perishable food items.

On a month-on-month basis, food inflation edged higher by 2.5pc in July due to 15pc increase in prices of perishable products and 0.65pc rise in non-perishable products.

The food items whose prices increased included tomatoes (92pc), fresh vegetables (29pc), potatoes (17pc), gram whole (9pc), eggs (9pc), besan (6pc), pulse gram (6pc), sugar (3.6pc), gur (2.5pc), onion (1.6pc), rice (1pc) and betel leaves (1.2pc).

Core inflation, measured by excluding volatile food and energy prices, was recorded at 4.5pc in July, slightly down from the previous month. This inflation has remained subdued since November last year because of a tighter monetary policy and reduction in food and fuel prices.

Government borrowing is one of the key factors influencing the trend of inflation as there is a positive relation between government borrowing and core inflation.

Non-food inflation was 3.7pc in July compared to 3.8pc in the previous month. This inflation has stagnated in the last three months as oil prices trod water.

Among the non-food groups, education and health indices increased by 7pc and 5pc in July compared to the same month of the last year. The highest increase of 18pc was witnessed in the index of alcoholic beverages and tobacco.

The index of clothing and footwear rose by 4.6pc and that of housing, water, electricity, gas and other fuels by 5pc.

Meanwhile, Sensitive Price Index edged up by 1.7pc and Wholesale Price Index (WPI) by 3pc.

The WPI has entered the positive growth trend from the new fiscal year, which shows a reverse in demand for domestic commodities.

Published in Dawn, August 2nd, 2016

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