ISLAMABAD  - Inflation rate has come down to 7.9 per cent in January 2014 from a year ago.

The latest figures of Pakistan Bureau of Statistics (PBS) showed that inflation based on Consumer Price Index (CPI) was registered at 7.9 per cent in January 2014 over the corresponding month of the previous year. Meanwhile, inflation was recorded at 8.75 per cent during first seven months (July-January) of the ongoing financial year. 

The SBP expects average CPI inflation for FY14 to fall between 10 to 11 per cent, which would be higher than the target of 8 percent announced by the government. Inflation rate had significantly increased during first half (July-December) of the current fiscal year mainly due to the result of the government’s economic policies and disruptions in supply chain of food commodities.

According to the latest monetary policy of the State Bank of Pakistan (SBP), inflation enhanced during first half due to rationalization of energy sector subsidies and an upward revision of General Sale Tax (GST) rate in addition to withdrawal of some exemptions. Similarly, the electricity tariffs were adjusted in two steps, first for commercial, bulk residential and industrial users in August 2013 and second for domestic consumers in October 2013.

However, inflation rate started declining from last couple of months due to improvement in supply chain of the food commodities. Inflation increased from a low of 5.1 percent in May 2013 to 10.9 percent in November 2013 before receding slightly to 9.2 percent in December 2013. Meanwhile, it has further reduced to 7.9 per cent in the month of January 2014.

According to the PBS figures, the CPI-based inflation enhanced by 0.5 percent during the month of January 2014. The sensitive price indicator, which gauges weekly inflation in kitchen items, decreased by 1.2 per cent in January 2014. Meanwhile, Wholesale Price Index (WPI) based inflation increased by 0.5 percent.

In January 2014, prices of food and nonalcoholic beverages shot up 6.68 percent, alcoholic beverages and tobacco 16.02 percent, clothing and footwear 11.99 percent, housing and utilities charges 9.30 percent, transportation fares 5.58 percent and healthcare charges 5.94 percent as compared to January 2013. Charges of recreation and culture were up by 9.82 percent, education 8.65 percent and restaurant and hotel 13.02 percent.

Price of chicken increased by 20.25 per cent in the month of January against December, prices of fresh vegetables by 8.37 percent, prices of fresh fruits went up by 3.38 percent, price of beans surged by 2.83 percent, price of milk powder increased by 2.07 percent, price of pulse masoor surged by 1.99 percent, price of honey went up by 1.62 percent, price of pulse moong enhanced by 1.57 percent, price of dry fruits enhanced by 1.43 percent, price of readymade food raised by 1.29 percent during the month of January.

Meanwhile, prices of following commodities decreased. Potatoes 26.32 percent, onions 23.92 percent, tomatoes 12 percent, eggs 8.77 percent, sugar 4.06 percent, tea 3.58 percent, gur 2.51 percent and pulse gram 1.09 percent.