Inflation surges by 6.37pc
ISLAMABAD, Aug 13: Consumer price inflation rose modestly by 6.37 per cent in July over the same month last year owing to tight monetary policy. This would be the lowest increase in inflation, so far, recorded in any month of the last fiscal year because of falling prices, particularly freezing of oil prices which helped control non-food inflation.
The government has projected 6.5pc annual inflation to be achieved during the year 2007-08.
The annual inflation in 2006-07 was 7.77 per cent as against the projected target of 7 per cent.
Official figures released by the Federal Bureau of Statistics here on Saturday showed that inflation measured through consumer price index (CPI) declined by 1.01pc in July 2007 over the previous month (June 2007).
This showed that the tight monetary policy had resulted into bringing down the core inflation non-food, non-energy which pushed down overall inflation during the first month of the current fiscal year.
However, the challenging issue of food supply and overcoming shortage of food items still remains the same as the food inflation is still on the higher side, which recorded a growth of 8.47pc during July 2007 over the last years figures in July.This means that the scaling down of overall inflation will not bear any fruits as food prices, which were mostly consumed by the poor people, are still on the higher side.
Similarly, the government had frozen oil prices in the domestic market that also resulted in lowering of the transportation cost and fares.
With this, the non-food inflation also witnessed a steep decline during the month under review.
The slowdown in inflation during the month under review was mainly due to decrease in non-food inflation and core inflation. Though the government recently constituted a ministerial committee on core food inflation for working out short-and long-term policy measures, it is yet to come up with some solution for arresting prices of some essential commodities.
Analysts said food inflation would further rise as supply of essential commodities, like potatoes, onions etc., in the market might decrease, coupled by increase in the price of sugar, wheat, meat and some vegetables.
Apart from the increase in food items, the medicare charges and education went up by 13.99pc and 6.22pc, respectively, in July 2007 over the same months of last year.
This indicates that charges of basic facilities, like life-saving drugs and education fee, sky-rocketed, thus affecting the monthly budget of the poor people.
The house rent recorded a growth of 6.91pc in July 2007, textile products 7.41pc, household furniture 6.15pc, fuel and light 2.56pc and laundry 4.96pc over the same month of last year.
The only area where some decrease was witnessed was transport and communications which recorded a negative growth of 3.07pc and recreation charges 0.01pc during the month under review over last year.
WPI: The wholesale prices of commodities increased by 7.60pc in the month of July 2007 over the same month last year.
Official figures released by the Federal Bureau of Statistics (FBS) showed that on a monthly basis, the wholesale price of commodities witnessed an upward trend, indicating that prices of products would increase at retail stage.
The WPI measures changes in average ex-factory and wholesale prices of 425 items grouped into five broad categories.
The categories include food items, raw material, fuel, lighting and lubricants, manufacturing and building material.
The main commodities, which showed an increase in their prices during July 2007 over June 2007, are as under:
Food: Vegetables (15.22pc), eggs (12.69pc), basEn (10.98pc), onions (9.89pc), gram split (8.57pc), potatoes (8.50pc), wheat flour (6.09pc), maida (6.04pc), masoor (6.01pc), bajra (5.86pc), wheat (5.46pc), cotton-seed oil (5.43pc), chicken (5.27pc), sugar refined (4.02pc), mustard and rapeseed oil (3.25pc), powdered milk (3.21pc), rice (2.54pc) and salt (1.50pc).
Cotton (6.84pc), mustard/rapeseeds (5.21pc), tobacco (1.28pc), coke (13.64pc), furnace oil (7.38pc), chemicals (3.81pc), fertilisers (2.23pc), soaps (1.69pc), iron bars and sheets (3.25pc) and bricks (1.63pc).
The main commodities which showed a decrease in their prices in July 2007 over June 2007 are in food: tomatoes (39.86pc), moong (4.03pc), maize (2.75pc), jowar (2.48pc), gram whole (2.44pc), fresh fruits (1.79pc), gur (1.67pc), fish (1.63pc), pig iron (5.89pc), skins (3.30pc) and paper (1.12pc).
http://www.dawn.com/2007/08/14/ebr1.htm