CPI INCREASES 1.8PC IN JULY

KANWAL SALEEM
(feedback@pgeconomist.com)
Aug 1 - 7, 2011

The Consumer Price Index (CPI), a key indicator of inflation, rose 1.80 percent during July 2011 over June 2011.

The Sensitive Price Indicator (SPI) during July 2011 increased 2.22 percent while the Wholesale Price Index (WPI) decreased 0.64 percent during the month as compared to June 2011.

An analysis of data shows that CPI, SPI, and WPI of July 2010 increased 1.23 percent, 1.85 percent and 1.67 percent over June 10 respectively. CPI, SPI, and WPI of July 2009 increased 1.54 percent, 2.78 percent, and 0.70 percent over June, 2009 respectively.

CPI increased by 13.77 percent in July 2011 over the same month last year, according to FBS data.

SPI and WPI during July 2011 also increased 17.34 percent and 21.13 percent respectively, over the same month of last year, the data revealed.

An analysis of the data shows that CPI, SPI, and WPI of July 2010 increased over July 2009 by 12.34 percent, 13.90 percent and 18.75 percent, respectively; and in July 2009 the CPI, SPI and WPI were 11.17 percent, 9.74 percent and 0.50 percent over July 2008 respectively.

The year on year inflation rates based on CPI, SPI, and WPI of July 2011 were higher as compared to July 2010 and July 2009 respectively.

The main commodities which showed an increase in their prices in July 2011 over June 2011 included tomatoes (53.67pc), chicken (19.79pc), eggs (17.38 pc), onions (13.50 pc), vegetables (13.18 pc), potatoes (11.75 pc), besan (6.46 pc), rice (6.20 pc), gram whole (5.59 pc), fresh fruits (5.46 pc), wheat (4.83 pc), gram split (4.76 pc), wheat flour (4.62 pc), gur (4.39 pc), salt (4.32 pc), sugar refined (4.24 pc), powdered milk (3.05 pc), maida (2.74 pc), fish (2.64 pc), beans (2.41 pc), mineral water (2.37 pc), vegetables prepared/preserved (2.35 pc), meat (2.05 pc), dry fruits (1.86 pc), oil cakes (1.52 pc), moong (1.48 pc), milk food (1.28 pc), mustard/rapeseeds (2.13 pc), utensils (5.49 pc), plastic products (5.10 pc), glass products (3.55 pc), fertilizers (3.48 pc), readymade garments (3.28 pc), matches (2.14 pc), chemicals and pesticides and insecticides (1.87 pc each), tubes (1.77 pc), blended yarn (1.53 pc), tyres (1.02 pc), soaps (one pc), bricks (12.39 pc), cement blocks (5.64 pc), iron bars and sheets (1.93 pc) and cement (1.92 pc).

The main commodities which showed a decrease in their prices in July 2011 over June 2011 included masoor (2.28 pc), jowar (2.25 pc), mash (2.18 pc), bajra (one pc), cotton (22.22pc), diesel oil (5.29 pc), motor sprit (3.46 pc), furnace oil (2.61 pc), cotton yarn (4.67 pc), and hosiery (1.22 pc).

Business leaders demanded hefty cut in the discount rate as reduction of 50 basis points would not provide any benefit to the business community. "SBP has only reduced its policy rate by 50 basis points whereas business community was expecting hefty cut in discount rate in new monetary policy in line with international trend," they said.

A senior member of Lahore Chamber of Commerce & Industry (LCCI) and business leader Mohammad Pervaiz Malik said the reduction of 0.5 percent in interest rate would not provide any benefit to businesspersons.

To control the damaging effects of current recession on the employment and investment, government should have announced an expansionary policy to boost growth of business and industrial activities and overcome the problems of unemployment and poverty, he said.

Malik said that power shortages have emerged as one of the most critical factors hampering economic activity in the country. There is a dire need of immense cut in interest rate to create some room for improving the chances of economic recovery and to remove systemic risks for the financial sector as well, he added.

He said that the government had declared year 2010 as the Year of Industrial Revival but no relief was provided to ailing industry. SPB should take measures to stop this trend and come up with concrete policies to support SMEs and industries, the business leader emphasized.