The Consumer Price Index (CPI) inflation during last month in May dropped to what the analysts said nine-year low of 5.1 percent. This was compared to 5.8 percent of the preceding month of April. “The number make another low of the rebased CPI index while is the lowest reported reading, including the old base, since March 2004,” viewed the analysts at Topline Research. On month-on-month (MoM) basis, the price hike during the month under review decreased to 0.5 percent as against 1.1 percent in April. “While the number declined to 7.5 percent in 11MFY13 compared to 11 percent in the same period last year,” said the Topline analysts. The analysts attribute this downward trend in the year-on-year (YoY) inflation to reduced gas prices and absence of increase in electricity tariff that, they believe, was keeping the inflation base low. “With another soft inflation reading in May, we estimate FY13 average inflation is likely to stand around 7.5 percent,” they said. This 7.5 percent is significantly lower than 9.5 percent the government had targeted in the outgoing fiscal year budget. Given the current significant ease in inflationary pressures the market observers foresee the central bank keeping the discount rate intact at 9.5 percent in its monetary policy decision for the next couple of months.
