The grueling price hike is hurting the highest income groups lesser in comparison with those earning below Rs 12,000 a month at a time when inflationary pressures in the poverty-stricken country are surging. The State Bank of Pakistan (SBP) said that inflation in the impoverished country was going upward because the resource-constrained government was passing the international oil price hike to the consumers.
The SBP’s inflation monitor, for March 2011, revealed that the highest income group, with a monthly earning of over Rs 12000, had observed lower than average Consumer Price Index (CPI) inflation during the month under review. The State Bank has categorised the salaried class into five income groups including those earning up to Rs 3,000, Rs 3,001-5,000, Rs 5,000-12,000, above Rs 12,000 and all income groups. “The first three income groups faced higher inflation than average inflation, whereas the highest income group observed lower than average annual CPI inflation,” the SBP said.
The SBP monitor depicted that the highest income group faced a general inflation of 12.7 percent during March against 14.6, 14.2 and 13.4 percent for those earning up to Rs 3,000, Rs 5,000 and Rs 12,000 per month. “But the same (highest income) group was hit most by the food inflation during the month,” it pointed out, adding that those earning the most faced a food inflation of 18.4 percent against 17.6, 17.6 and 17.8 percent of the first three groups. The non-inflation inflation, covering sectors like apparel textile, house rent, household furniture, laundry and personal appearance, fuel and light recreation and entertainment, medicare, transport and Communication, energy and agricultural raw material, rendered unnerved those earning up to Rs 5000 a month.
“The first two income groups were significantly hurt from non-food inflation, whereas the third income group was least affected by non-food inflation during the month,” the bank said. The central bank noted that inflationary pressures in the country had strengthened during the month under review as reflected by all price indices. It said that the Consumer Price Index (CPI) inflation rose to 13.2 percent annually in March after easing a little during the preceding three months, December-February FY11. On monthly basis, the CPI witnessed an inflation of 1.5 percent as against 0.7 percent deflation a month earlier.
The annual CPI food inflation increased slightly from 17.7 percent in February to 18 percent during the month under review. The CPI non-food inflation was 9.1 percent, lower than 8.9 percent observed last month, but higher than 11.6 percent seen in the corresponding month of 2010. “A moderate annual increase in both food and non-food inflation caused the up tick in headline inflation during the month,” the SBP said. The Wholesale Price Index (WPI) inflation, the bank said, also jumped to 25.4 percent during the month from 24.4 percent in the preceding month.
Similarly, it said, the Sensitive Price Index (SPI) inflation also went slightly up from 16.2 percent in the previous month to 16.3 percent. Citing several attributive factors to the price hike, the State Bank researchers concluded that the government’s passing on the impact of soaring international oil prices to the end consumers and the inflated adjustments in the local power rates were the two major stimuli for the existing inflationary pressures.
“Several factors contributed to the resurge in inflation during March 2011, such as passing on the impact of rising international oil prices to the domestic consumers and upward adjustment in electricity tariffs,” the bank monitor observed. It went on to say that like headline inflation, core inflation also trended upwards during the month. The core inflation measured by 20 percent trimmed mean increased by 0.2 percentage points during March as against a 0.5 percent decrease in the previous month.
Similarly, the Non-Food Non-Energy (NFNE), another core inflation measure, soared by 0.3 percentage points during the month as against a decline of 0.2 percentage points in February 2011. The bank said that with the reverse in headline inflation during the month, after easing for three straight months, inflation diffusion (for overall CPI basket) also reversed from its declining trend commenced in November last year. “Similar reversal was also seen in inflation diffusion for food, beverages and tobacco, fuel and lighting, household furniture and equipment, and cleaning, laundry and personal appearance groups during the month,” the SBP said.
