The country’s consumer price index (CPI) inflation increased 2.7 per cent Year on Year (YoY) this year compared to 1.6 per cent recorded in October 2015.
On MoM basis, inflation increased by 0.6 per cent in November 2015 as against the increase of 0.5 per cent during the previous month.
Food inflation with 35 per cent weight in CPI basket increased by 1.3 per cent YoY in November 2015 as against a decline of 0.4 per cent in the previous month. On MoM basis, food inflation was up 1.3 per cent in November 2015 as against 0.5 per cent in October 2015.
Prices of major food items including Onions, Tomatoes, and Chicken were up by 15 per cent to 21 per cent MoM whereas prices of food items including Fresh Fruits, Rice and Sugar were down 4 per cent to 8 per cent.
Along with higher food inflation, transport index also recorded an increase during the month of November following revision in fuel prices. Transport index was up 0.7 per cent MoM as against increase of 0.1 per cent in Oct 2015.
Core inflation which slowed down to 3.4 per cent in Oct 2015 after a peak of 6.2 per cent in February 2015 rebounded to 4.0 per cent in November 2015. Higher inflation registered by Tobacco, Restaurants and Hotels and Health segments led to an increase in core inflation. Core inflation in five month 2015-16 clocked in at 3.8 per cent as against 7.8 per cent in the same period last year.
In five month 2015-16, CPI inflation has averaged 3.8 per cent as against 7.8 per cent in the same period last year, driven by lower oil prices and stability in food prices.
Due to the wearing-off of high base effect from November 2015, analysts anticipate inflation to pick up further from November 2015. However, inflation is expected to remain within SBP’s revised inflation target of 4.5 per cent-5 per cent and government target of 8.0 per cent.
In view of an expected increase in inflation from November 2015, SBP kept the policy rate unchanged at 6 per cent in its last monetary policy announcement in November 2015.
Currently, energy price hike is a key risk that can adversely affect the inflation outlook, analysts believe.
