Consumer price index (CPI) inflation in the country fell to signal digits during the month of December after a lapse of 24 months to clock at 9.75 per cent as against 10.19 per cent recorded in the previous month. Moreover, after February 2011 the figure registered a decline of 0.7 per cent on month-on-month (MoM) while average 6MFY11 inflation stood at 10.9 per cent. “Though we still await the complete break-up of the number but our initial assessment suggests that the soft number is primarily attributed to declining prices in the food categorym,” said Nauman Khan of Topline Securities. The analyst said that in line with the historical trend food prices had softened as effect of Eid-ul-Azha faded away. With these soft numbers, there is high probability that current financial year, FY12, would see average inflation falling well below the government’s target of 12 percent, Khan added. Another market observer, Khurram Schehzad of InvestCap Research, opined that the inflation rate for December was “way lower than the consensus forecast”.
