KARACHI, Jan 29: The State Bank reported on Tuesday that the CPI inflation was significantly higher than the five-year average of monthly increase in December.
The bank also noted that the core inflation in December was the highest since February 2006.
The in-depth report and analysis on inflation was issued by the SBP through its monthly report “Inflation Monitor.”
The most significant part of the report was about the sharp increase in the house rent creating serious threat intensifying the housing problems and depriving more people of the temporary shelters across the country.
The report says that both measures of core inflation i.e. NFNE (non-food non-energy) and 20 per cent trimmed-mean continued to show a rising trend that started in June 2007.
“Thus on year-on-year (YoY) basis, NFNE based core inflation increased to 7.2 per cent in December 2007, which is the highest since February 2006, from 5.7 per cent in December 2006,” said the Inflation Monitor.
“This uptrend in core inflation is principally the result of rising house rent index (HRI) inflation during the past few months,” it added.
Inflation recorded by the house rent index sub-group maintained the rising trend seen since May 2007 to reach 8.8 per cent in December 2007 compared to 6.4 per cent in the same month last year.
“Rising wage inflation and higher prices of bricks, iron bars and sheets and wires and cables are specifically putting upward pressure on HRI inflation,” said the SBP report.
Similarly, core inflation based on 20 per cent trimmed-mean accelerated and was recorded at 8.7 per cent in December 2007 compared to 6.3 per cent in the same month last year
“Food inflation still remained high and witnessed a double digits rise for the fourth consecutive month (from September to December 2007),” said the SBP. However, it added that the contribution of food inflation in overall inflation declined to 58.9 per cent in December 2007, lower than the 60.9 per cent contribution during November 2007.
The slightly lower CPI inflation was mainly due to the food Inflation that depicted a decline of 0.5 percentage points and was recorded at 12.2pc during December compared to 12.7pc in the corresponding month last year.
The report said the contribution of non-food group in overall inflation increased to 41.1 per cent in December 2007 from 39.1 per cent in November 2007.
Like previous month, the most prominent upward movement was observed in the price of all four varieties of rice that showed significant increase in YoY inflation ranging between 47.5 to 61.9 per cent in December 2007.
On the other hand, the contribution of individual food items in the overall YoY CPI inflation has been significant as 7 out of top10 items contributing in overall inflation during December 2007 were from the food group.
These items, which have a cumulative weight of 20.6 per cent, include wheat flour, vegetable ghee, fresh milk, rice, fresh fruits, meat and wheat. The combined contribution of these food items was more than 61 per cent in the overall inflation during December 2007. “Within the food group, wheat, rice, ghee and milk contributed about 92 per cent of the food inflation during December 2007,” said Inflation Monitor.
The SBP noted that the WPI (wholesale price index) inflation accelerated sharply, witnessing a double digits YoY rise for the third consecutive month.
WPI inflation stood at 12.2 per cent during December 2007 as compared to 8 per cent recorded in the same month last year.
