Inflation has recorded at 1.8 percent in July 2015 over the corresponding month of the previous year, stoking the fear of deflation.

Inflation measures through Consumer Price Index (CPI) recorded at 1.8 percent in the first month (July) of the ongoing financial over 2015-16 as compared to the same period of the preceding year, according to the latest data released by Pakistan Bureau of Statistics (PBS) on Monday.

The continuous decline in inflation has created risk of deflation, as the economy is expected to slow further in the next few quarters. Deflation occurs when the inflation rate continuously declines and falls below zero percent (a negative inflation rate).

It has touched the more than one decade lower side in July 2015.

Inflation is continuously on the declining side from last several months since the oil prices tumbled in the international market. The government had contained the inflation at below five percent during previous fiscal year 2014-15 as against the target of eight percent.

The government has kept the inflation target at 6 percent for the ongoing financial year 2015-16. The State Bank of Pakistan (SBP) warned that inflation rate could surge in the months to come due to the possibility of upward revision in energy tariffs in FY16 and an adverse impact of floods on production of perishable food items.

It is worth mentioning here that prices of vegetables and fruits already started increasing due to the devastating floods in different parts of the country, which would push the inflation rate to the higher side.

According to the PBS figures, the sensitive price indicator (SPI), which gauges weekly inflation in kitchen items, has decreased by 0.48 percent in July 2015 as against the same month of last year. Similarly, the wholesale price index (WPI) based inflation decreased by 2.86 per cent in the period under review.

Meanwhile, the CPI inflation remained at 1.8 percent during the month of July 2015 as compare to the same month of the previous year.

According to the data, food and non-alcoholic beverages prices had decreased by 0.33 and utilities (housing, water, electricity, gas and fuel) by 4.47 percent in July 2015.

Health and education charges went up by 3.18 percent and 9.32 percent, respectively. However, transportation charges were down by 9.96 percent because of the declining petroleum prices.

Prices of alcoholic beverages and tobacco stood at 16.56 percent, clothing and footwear 4.84 percent and furnishings and household equipment maintenance 4.46 percent. Charges related to recreation and culture went up 2.25 percent and restaurants and hotel 4.38 percent in July 2015 over the same month in 2014.

Meanwhile, the PBS data showed that price of pulse gram increased by 8.26 percent in the month of July 2015 against June, price of fresh fruits enhanced by 7.2 percent, price of potatoes surged by 6.81 percent, price of besan went up by 5.63 percent, price of sugar increased 5.37 percent, price of gram whole up by 3.06 percent, gur 2.55 percent, cigarettes 1.7 percent, eggs 1.26 percent and beverages price enhanced 1.1 percent during July 2015.

Similarly, in non-food commodities, household servants charges surged by 2.46 percent, readymade garments 1.42 percent, house rent 1.19 percent and tailoring charges enhanced by 1.09 percent.

Meanwhile, prices of following commodities decreased: tomatoes 29.06 percent, onions 8.83 percent, chicken 5.3 percent, fresh vegetables 3.74 percent, pulse moong 1.73 percent Betel Leaves & Nuts 1.36 percent and fish 1.03 percent during July against June.