A.Rafay
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ISLAMABAD:
Inflation rate dropped to 7.66% in October, a level achieved for the first time in five and a half years, but raised eyebrows among independent observers, who question the method of computing the figures.
According to data released by the Pakistan Bureau of Statistics (PBS) here on Friday, inflation measured by the Consumer Price Index clocked in at 7.66% in October, way below the government projection that inflation would be 9.5% by the end of the current fiscal year in June 2013.
Last time, the inflation came close to that level was in April 2007, when CPI stood at 7.67%.
The inflation figures came just 48 hours after a cabinet meeting in which ministers asked basic questions about CPI-based inflation and sought reasons for the difference between prices of commodities quoted in official statistics and prices in the market.
Dispelling doubts about authenticity of the data, Statistics Division Secretary Sohail Ahmad told the media he was ready to defend the official figures in the cabinet, if he was asked to do so. He said he would give a presentation on inflation in the next Economic Coordination Committee (ECC) meeting.
Owing to continuous single-digit inflation, average inflation in the first four months (July-October) of the current fiscal year remained at 8.76%, according to the PBS.
However, independent economists seem to be confused by the fast falling inflation. Inflation results are totally against economic principles and I can bet that the way things are manipulated the inflation will come down to 4% by June next year, said Dr Ashfaque Hasan Khan, Dean Business School, National University of Sciences and Technology (NUST).
He said the government was playing with inflation figures to pave the way for a further cut in interest rate to appease industrialists ahead of general elections.
He pointed out that in order to manipulate inflation data the government had slashed gas prices, which declined at the rate of around 40% per month for the last three months following change in the base year. In October, statistics showed gas prices decreased by 42.1% compared to the same month a year earlier.
Khan was not the only one who was sceptical about the inflation data. Business Recorder wrote in its Friday editorial that the claim of single-digit inflation requires highlighting relevant facts. First and foremost, the mechanism for the calculation of food component of the Consumer Price Index was changed during last fiscal year.
It added previously perishable and non-perishable food items were lumped together with tobacco, betel leaves/nuts and alcoholic beverages. The two have now been separated, resulting in a massive decline in the weight given to food items relative to beverages, tobacco and betel nuts/leaves only 7.13% for the former and a whopping 17.8% for the latter.
The reason given for the change was variation in consumption patterns, however, it was not clear what was the basis for this specific assessment, it said.
Another key indicator that shows inflationary pressures despite single-digit inflation is core
inflation, excluding volatile food and energy prices.
According to the PBS, core inflation was still in double digits and stood at 10.8% in October from a year earlier.
Believe it or not: Inflation at lowest in five and a half years – The Express Tribune
Inflation rate dropped to 7.66% in October, a level achieved for the first time in five and a half years, but raised eyebrows among independent observers, who question the method of computing the figures.
According to data released by the Pakistan Bureau of Statistics (PBS) here on Friday, inflation measured by the Consumer Price Index clocked in at 7.66% in October, way below the government projection that inflation would be 9.5% by the end of the current fiscal year in June 2013.
Last time, the inflation came close to that level was in April 2007, when CPI stood at 7.67%.
The inflation figures came just 48 hours after a cabinet meeting in which ministers asked basic questions about CPI-based inflation and sought reasons for the difference between prices of commodities quoted in official statistics and prices in the market.
Dispelling doubts about authenticity of the data, Statistics Division Secretary Sohail Ahmad told the media he was ready to defend the official figures in the cabinet, if he was asked to do so. He said he would give a presentation on inflation in the next Economic Coordination Committee (ECC) meeting.
Owing to continuous single-digit inflation, average inflation in the first four months (July-October) of the current fiscal year remained at 8.76%, according to the PBS.
However, independent economists seem to be confused by the fast falling inflation. Inflation results are totally against economic principles and I can bet that the way things are manipulated the inflation will come down to 4% by June next year, said Dr Ashfaque Hasan Khan, Dean Business School, National University of Sciences and Technology (NUST).
He said the government was playing with inflation figures to pave the way for a further cut in interest rate to appease industrialists ahead of general elections.
He pointed out that in order to manipulate inflation data the government had slashed gas prices, which declined at the rate of around 40% per month for the last three months following change in the base year. In October, statistics showed gas prices decreased by 42.1% compared to the same month a year earlier.
Khan was not the only one who was sceptical about the inflation data. Business Recorder wrote in its Friday editorial that the claim of single-digit inflation requires highlighting relevant facts. First and foremost, the mechanism for the calculation of food component of the Consumer Price Index was changed during last fiscal year.
It added previously perishable and non-perishable food items were lumped together with tobacco, betel leaves/nuts and alcoholic beverages. The two have now been separated, resulting in a massive decline in the weight given to food items relative to beverages, tobacco and betel nuts/leaves only 7.13% for the former and a whopping 17.8% for the latter.
The reason given for the change was variation in consumption patterns, however, it was not clear what was the basis for this specific assessment, it said.
Another key indicator that shows inflationary pressures despite single-digit inflation is core
inflation, excluding volatile food and energy prices.
According to the PBS, core inflation was still in double digits and stood at 10.8% in October from a year earlier.
Believe it or not: Inflation at lowest in five and a half years – The Express Tribune
