CPI inflation at record low of 3.24 percent in February

ISLAMABAD: Pakistan’s Consumer Price Index inflation has been clocked in at over a decade-low of 3.24 percent in February 2015, data released by the Pakistan Bureau of Statistics (PBS) revealed on Monday.
Economists warn the low number indicates the country is marching towards deflation.
Since October 2003, this is the weakest reading. Previous month (January 2015), inflation was recorded at 3.9 percent and 7.9 percent in February 2014, it said.
It is dangerously low figure and its rapidly declining trend indicates the economy is cooling down and reinforcing expectations that the authorities will roll out measures to support growth. Once the inflation is too low, it leads to idle productive capacity, low investment, fewer jobs and reduced aggregate demand in economy, the economists said.
Historically, from 2003 to October this year, an average CPI inflation remained in the double-digit, hitting a historic high of 25.33 percent in August 2008 and a record low of 1.41 percent in July 2003.
Interestingly, the wholesale price index (WPI), on a year-on-year basis, went down by 3.4 percent in Feb 2015 as compared to 2.4 percent decrease a month ago and increase of 7.6 percent in Feb 2014. This also indicates that in the months to come the CPI inflation will further go down.
Inflation in Pakistan should be between five to six percent. Inflation greases the wheels of the economy and keeps the economic activities alive. Lower inflation discourages producers, the economists said.
Eight-month (July-Feb 2014-15), average inflation stood at 5.45 percent as compared to 8.65 percent in the same period of the last fiscal year.
In February 2015, food and non-alcoholic beverages price were up by 1.2 percent and utilities (housing, water, electricity, gas and fuel) by 5.72 percent.
Interestingly, health and education charges became dearer by 5.77 percent and 14.2 percent, respectively.
Prices of alcoholic beverages and tobacco stood at 20.23 percent, clothing and footwear 7.7 percent and furnishings and household equipment maintenance 5.97 percent.
Charges related to recreation and culture went up 3.4 percent and restaurants and hotels 5.5 percent in Feb 2015 over the same month in 2014. However, transportation charges were down by 11.12 percent.
The sensitive price indicator, which gauges weekly-based inflation in kitchen items, inched up by only 0.2 percent in Feb 2015 year-on-year, compared to 1.1 percent increase a month ago and 7.5 percent in Feb 2014.
Core inflation, measured by non-food non-energy CPI, rose by 6.2 percent in February 2015 as compared to 6.4 percent in the previous month and by 7.8 percent in Feb 2014, the Pakistan Bureau of Statistics data showed.