Inflation rate has increased to 3.2 percent in May 2015 over the corresponding period of previous year mainly due to the hike in food commodities prices that started enhancing before the arrival of Ramazan.

Inflation, measured by the Consumer Price Index (CPI), recorded at 3.2 percent in May 2015 as compare the same period of the last year. CPI edged up by 0.8 percent in May over April. Inflation would further enhance in next month as government increased the prices of petroleum products for the ongoing month of June. Similarly, inflationary pressures would also build up due to upcoming month of Ramazan, as prices of food item surged in the holy month.

The government has also estimated that inflation rate would increase to 6 percent in the upcoming fiscal year starting from July 1 2015 as against 4.8 percent of the ongoing year due to the expected raise in petroleum products prices in the international market.

The inflation rate had come down to 12 years low level of 2.1 percent in April 2015 due to the massive decline in international market. The State Bank of Pakistan (SBP) in successive monetary policy reduced the interest rate announced from November 2014 onwards following the steep decline in inflation rate. On May 23 2015, the SBP reduced the interest rate by one percent to seven percent from eight percent, the lowest in 42 years.

The SBP projects consumer price index inflation in the range of 4 to 5 percent for the whole year as compared to the original target of 8 percent. The government is expecting to restrict the inflation rate at around 5 per cent during current fiscal year. The inflation will be lowest during the past decade.

According to the latest figures of Pakistan Bureau of Statistics (PBS), average inflation in first eleven months (July-May) of the outgoing fiscal year has remained at 4.65 per cent over the corresponding period last year. Meanwhile, the sensitive price indicator (SPI), which gauges weekly inflation in kitchen items, increased by 1.8 per cent in July-May 2014-15 as against the same months of last year.

However, the wholesale price index (WPI) based inflation decreased by 0.14 per cent in the period under review.

In May 2015, food and non-alcoholic beverages prices were down by 2.22 percent and utilities (housing, water, electricity, gas and fuel) by 4.86 per cent. Health and education charges became dearer by 3.35 percent and 10.43 percent, respectively.

Prices of alcoholic beverages and tobacco stood at 20.26 per cent, clothing and footwear 6.13 per cent and furnishings and household equipment maintenance 4.37 per cent. Charges related to recreation and culture went up 2.39 per cent and restaurants and hotel 4.37 per cent in May 2015 over the same month in 2014.

However, transportation charges were down by 9.34 percent because of the declining petroleum prices.

Meanwhile, the PBS data showed that price of tomatoes increased by 17.57 percent in the month of May 2015 against April, price of pulse gram 14.89 percent, besan 13.05 per cent, fresh vegetables 11.49 percent, chicken 10.7 percent, fresh fruits 9.16 percent, onions 7.34 percent, pulse mash 5.97 percent, gram whole 5.81 percent, gur 3.09 percent, pulse masoor 3.03 percent and sugar 2.47 percent.

Similarly, in non-food commodities, kerosene oil price surged by 1.4 percent and mechanical service 1.31 percent.

Meanwhile, prices of following commodities decreased: eggs 5.91 percent, wheat 2.86 percent, potatoes 2.82 percent, cooking oil 1.69 percent, vegetable ghee 1.46 per cent and wheat flour 1.07 percent during May over April.