Food price fall pulls inflation down to 3.17pc


ISLAMABAD: Pakistan’s annual consumer inflation dropped to 3.17 per cent in May from 4.17pc in the preceding month, mainly on the back of fall in prices of food items, the Pakistan Bureau of Statistics said on Wednesday.

On a month-on-month basis, prices fell by 0.2pc in May from April.

The annual inflation is measured through the Consumer Price Index, which tracks prices of 481 commodities. Average inflation for the July-May 2015-16 period now stands at 2.82pc compared to 4.65pc a year earlier.

Core inflation, measured by excluding volatile food and energy prices, was recorded at 4.6pc in May, slightly higher than 4.4pc in the previous month. Falling inflation has also encouraged the State Bank of Pakistan to lower its key interest rate at a 42-year low of 5.75pc.

Core inflation has remained subdued since November last year because of a tighter monetary policy and reduction in food and fuel prices.

In May, food inflation stood at 2.1pc. On month-on-month basis, it fell by 0.7pc mainly due to perishable and non-perishable items.

Prices of perishable items fell by more than 5pc in May compared to the preceding month. The price of tomatoes dropped 49.4pc, onions 16pc, fresh vegetables 7pc, eggs 4.5pc, chicken 6.4pc and wheat (4.6pc).

The food items whose prices increased included pulse gram 12.5pc, besan 11.8pc, gram (whole) 10.2pc, pulse maash (washed) 3.7pc, fresh fruit 3.5pc and pulse masoor 3.1pc.

Non-food inflation increased 0.2pc in May compared to the previous month. The price of education increased 1.2pc, household textiles 0.67pc and kerosene 0.63pc.

Average inflation measured through the Sensitive Price Index rose 1.36pc in July-May 2015-16 while the Wholesale Price Index (WPI) was negative 1.17pc.

Lower WPI reflects less demand for domestic commodities, mainly because of low purchasing power. The entrance of the manufacturing sector into a negative growth indicates deflation in economy.

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