KARACHI, July 20: Inflation in both consumer and wholesale price indices has been on the rise since April 2006, while the food inflation showed a sharp rise during the last three months.

The State Bank on Thursday issued a detailed monthly analysis “Inflation Monitor- June 2006” which showed that the Consumer Price Index (CPI) and Wholesale Price Index (WPI) were on the rise since April and the size of increase was significant.

The data provided by the SBP showed that the food prices jumped by 4.2 per cent to 7.8 per cent in June 2006. In April food inflation was 3.6 per cent but the galloping price increase pushed the inflation on speedy track.

The rising inflation trend was also reflected in WPI since April 2006. The WPI general inflation rose to 9 per cent in June from 8.1 per cent in April.

The food inflation again showed a significant increase under WPI. It rose to 6.7 per cent in June from 4.5 per cent in April 2006. The WPI non-food inflation slightly increases to 10.7 per cent in June from 10.6 per cent in May 2006.

The month of April was the benchmark as the inflation started picking up sharply. The Sensitive Price Index (SPI) also took a big jump during this period.

In April 2006 the SPI was 6.8 per cent and it hit the figure of 8.9 per cent in June. According to SBP data, only the core inflation remained constant during the three months, from April to June at 6 per cent.

“The increase in inflation during June 2006 was primarily caused by sharp rise in the prices of essential food items that pushed the CPI food inflation by more than two percentage points up from its level in May 2006,” said the SBP report.

On the other hand, non-food inflation witnessed a decline in June due to continuous slowdown in house rent index and fall in the rate of increase in fuel and lighting and transport and communication price indices. The movements in food and non-food components of WPI were also in line with those of CPI basket.

However, the report maintained that the headline inflation had declined by one percentage point to 7.4 per cent on year-on-year basis. The non-food items included under the CPI has declined to 7.5 per cent from 8.2 per cent.

The long-run trend in inflation measured as 12-month moving average shows that the consumer price inflation is on the declining path since May 2005; however, it is still significantly higher than average inflation of 3.8 per cent during the five years prior to FY05, said the report.The long-run inflation in WPI, on the other hand, maintained a rising trend despite year-on-year decline witnessed since August 2005.

The long-run movements in SPI inflation are similar to those in CPI except that recent decline is steeper in the case of SPI than CPI, said the report.

Analysts said that the decline in CPI on year-on-year basis was because of high base effect but the rising inflation trend since April 2006 was causing concern.

They said that despite subsidies from the government the prices were still on higher side. They said that hundreds of utility stores could not control the prices even in the mega cities like Karachi. The sensitive issue of inflation also involves the State Bank’s role which recently took a major step to slash the presence of liquidity in the system which could also cause inflation. Cheaper supply of credit is one major reason for high inflation.