Last month saw the Consumer Price Index (CPI) inflation stand at a surprising 12.29 percent against 11.15 percent in the preceding month (April). This, the analysts said, was well above the market consensus of 11.23 percent. The year-on-year increase has occurred after a gap of 10 months. On a month-on-month basis, inflation went up significantly by 1.15 percent on account of 16.38 percent increase in electricity charges pushing the housing related head up by 2.82 percent, 29.4 percent weightage in CPI basket.
The authorities have taken in the effect of 16 percent increase in the electricity tariff announced by the NEPRA on May 16 which has created deviation from the market consensus. Food inflation (34.8 percent weightage in CPI basket) clocked at 0.15 percent with perishable food items depicting a decline of 2.46 percent, while transportation declined by 0.01 percent. Average CPI inflation during 11MFY12 stood at 10.98 percent as against 13.69 percent recorded in the same period last year.
“Though average FY12 inflation is expected to be on the lower side of the SBP’s expectation range of 11-12 percent, but persistent high MoM inflation is expected to be a source of concern for the policy makers,” viewed Nauman Khan, an analyst at Topline Research.