ISLAMABAD: The country’s average inflation, measured through Consumer Price Index (CPI), dipped to 2.9 per cent in the first month of this fiscal year—its lowest level since November 2015.

Falling petroleum and food prices, coupled with a stable rupee, largely contributed to low inflation.

The CPI, which tracks prices of 481 commodities every month in the country’s urban centres — eased to 2.9pc in July from 3.9pc in June, the Pakistan Bureau of Statistics said on Tuesday.

In 2016-17, the average inflation was recorded at 4.16pc the food inflation, which has 37pc weight in the CPI basket, eased by 0.1pc in July as compared to 2.5pc jump in the same month of the last year.

This decline in food inflation was the outcome of a fall in prices of non-perishable food items.

On a month-on-month basis, food inflation remained stagnant over the previous month.

The food items whose prices increased included onion (10pc), fresh vegetables (9.3pc), chicken (4.18pc), eggs (3.75pc), beans (3.1pc) and betel leaves and nuts (1.24pc).

Core inflation, measured by excluding volatile food and energy prices, was recorded at 5.6pc in July, slightly up 0.7pc from the previous month.

Falling inflation has also encouraged the State Bank of Pakistan (SBP) to keep its key interest rate at a 42-year low of 5.75pc.

The non-food inflation was 5.1pc during the month under review as compared to 5pc in the previous month.

Among the non-food group, education index increased by 0.11pc and health by 0.12pc in July as compared to the previous month. The highest increase of 1.1pc was witnessed in the index of housing, water, electricity, gas and fuels.

Average inflation measured through the Sensitive Price Index (SPI) dropped 0.4pc in July, while the Wholesale Price Index (WPI) was positive 0.66pc.

Low WPI reflects less demand for domestic commodities mainly because of low purchasing power.

Published in Dawn, August 2nd, 2017