KARACHI, March 20: Prices of essential items in the second quarter of 2002-03 remained on the higher side mildly as compared to the same period of 2001-02.
The Consumer Price Index (CPI) increased by 3.3 per cent in the second quarter of 2002-03 as compared to 2.8 per cent in the same period of 2001-02, says the second quarterly report of the State Bank of Pakistan (SBP) released here on Thursday.
The annualized rate of inflation during the second quarter of 2002-03 remained visibly higher than in the preceding quarter as reflected in all three main indices CPI, WPI and SPI. However, inflationary pressure appears to have moderated during the period with the respective marginal inflation rates in two key indices — CPI and the SPI, dropping below their corresponding 12 months moving averages, the report said.
As a result, the CPI inflation of 3.8 per cent in first quarter dropped to 3.3 per cent in the second quarter of 2002-03 and similarly, SPI plunged from 5.2 per cent to 3.5 per cent in the corresponding periods, the SBP report said.
However, it is unclear at this point if this relatively benign picture will be sustained as the movement of the WPI is in sharp contrast to the other two indices. WPI inflation marched steadily upwards through first half of 2002-03, rising from 3.2 per cent in first quarter of 2002-03 to 6.2 per cent in second quarter of 2002-03. This could be a point of concern since historically, the movement of the CPI has seen a lagged through weak correlation with the WPI.
Interestingly, however, in contrast to first quarter of 2002-03, it was non-food group that
Essentials remain costly contributed to inflationary pressures, prices of many imported food items either registered a decline or stagnated during the second quarter of 2002-03. Also higher imports of consumer goods and raw materials for consumer goods during the first half of 2002-03 relative to 2001-02, amidst a strengthening rupee and lower unit prices of imports seemed to have cushioned price pressures.
The decline in food inflation largely seems a function of supply side factors as well as imported deflation. The improved market conditions due to the relatively good production and lower exports of some of the important crops including onion, potatoes and tomatoes combined with better availability of sugar and milk as well as lower prices of POL products, appear to have contributed to a subdued rate of inflation in the second quarter of the current fiscal year.
CPI Food: Wheat prices saw a gradual rise through 2002-03 possibly reflecting higher wheat exports. Prices of vegetable ghee were higher by 20.1 per cent during the second quarter of 2002-03 over same period of 2001-02 and about four per cent over first quarter of 2002-03. Prices of sugar, milk, chicken farm, besan and garlic recorded a fall. Price of pulses in second quarter of 2002-03 declined across-the-board both over last year level as well as over first quarter of the current fiscal year largely due to availability of cheaper imports. In non-food group, prices increased by 3.6 per cent in the second quarter of 2002-03 as against 3.7 per cent rise in corresponding period last year.
WPI Food: The Wholesale Price Index (WPI), which had recorded a marginal growth of 0.4 per cent during the second quarter of 2001-02 rose sharply at the rate of 6.2 per cent in second quarter of 2002-03. Food prices in wholesale markets recorded an increase of three per cent during the second quarter of 2002-03 as against a 1.5 per cent rise in second quarter of 2001-02. Cooking oil, rice, wheat, flour, maize and fresh fruits were main items that recorded increase. In non-food, substantial increase was recorded in prices of fuel, lighting, raw materials and lubricants.