The consumer price index (CPI) inflation of the country hiked by 4.2pc on the year-on-year (YoY) basis in February 2017 as compared to an increase of 3.7pc in the previous month or 4pc in February 2016.
On the month-on-month (MoM) basis, it increased by 0.3pc in February 2017 as compared to an increase of 0.2pc in the previous month and a decrease of 0.3pc in February 2016.
According to an analyst, “The average inflation clocked in at 4.2 percent during the first eight months, lower than the earlier projections due to the smooth supply of perishable items, stable exchange rate, and government’s absorption of the impact of higher international oil prices. The current trends suggest that the actual inflation would be lower than the target rate of 6pc in 2016-17.”
In the last month, the government enhanced the price of petrol and other petroleum products in the country and this is expected to directly hit core inflation in the coming months, another analyst said. “We are looking at inflation above 4.5pc in March and April 2017 only because of the higher petroleum prices in the international market.”
Core inflation measured by non-food non-energy CPI increased by 5.3pc YoY in February 2017 as compared to increase of 5.4pc in the previous month or 4.5pc in February 2016. MoM, it increased by 0.2pc in February 2017 as compared to increase of 1.1pc in the previous month, and an increase of 0.2pc in February 2016.
Core inflation, measured by 20pc weighted trimmed mean CPI (Core Trimmed) increased by 4.1pc YoY in February 2017 as compared to 3.8pc in the previous month and by 3.6pc in February 2016. MoM, it increased by 0.2pc in February 2017 as compared to an increase of 0.6pc in the previous month and an increase of 0.1pc in February 2016.
SPI inflation increased by 1.1pc YoY in February 2017 as compared to an increase of 0.4pc a month earlier and an increase of 3.6pc in February 2016. MoM, it increased by 0.2pc in February 2017 as compared to a decrease of 0.8pc a month earlier and a decrease of 0.5pc in February 2016.
WPI inflation increased by 5.3pc YoY in February 2017 as compared to an increase of 4.2pc a month earlier and an increase of 0.6pc in February 2016. MoM, it increased by 0.5pc in February 2017 as compared to an increase of 0.5pc a month earlier and a decrease of 0.6pc in February 2016.
According to the analysts, interest rates will remain stable during 2016-17 and are expected to increase nominally in 2017-18 and 2018-19. The analysts said that the State Bank of Pakistan (SBP)’s policy rate is to be 6.75pc by 2018-19 (compared to 5.75pc now). Currently, the major oil price hike remains the key risk that can adversely affect the inflation outlook.
Crude oil price predictions for 2017 show that it could climb by 15pc to $62 a barrel and Brent crude could rise up to $65 a barrel by April 2017.
