KARACHI - As overall inflation declined during June 2009, city-wise inflation (YoY) in all major cities except Islamabad, also declined compared to both the previous month and the same month last year. It is to be noted that inflation (YoY) in all major cities is lower than the average inflation during June 2009. However, on MoM basis, inflation was higher than the average CPI inflation in three out of five major cities, SBP pointed out in its report. The report says, city-wise inflation data collected from 35 cities revealed that 16 cities were in the category of high inflation, while remaining 19 cities were categorised as low inflation cities during June 2009. The highest inflation (YoY) was recorded in DG Khan followed by Shahdadpur, whereas the lowest inflation (YoY) was recorded in Bannu. Among 35 cities, DG Khan and Bannu were the highest and lowest in food inflation (YoY) respectively. Shahdadpur and Bannu were the highest and lowest in non-food inflation (YoY) during June 2009 respectively. City-wise data revealed that out of 35 cities, 18 cities had higher and remaining 17 cities had lower than the overall CPI inflation (MoM). The highest inflation (MoM) of 2.6 percent was recorded in Sialkot during June 2009 as against the deflation of 0.9 percent (MoM) in Bannu. The report further revealed that the headline CPI inflation (YoY) moved down to 13.1 percent during June 2009 compared to 21.5 percent in the corresponding month last year and 14.4 percent in the preceding month. The inflation was more contained in the last six months of FY09 as compared to the first six months (Jul 08 to Dec 08): the average CPI inflation (YoY) during the first half of the year was 24.4 percent which declined to 17.6 percent in the second half primarily due to fall in food inflation. Unlike overall CPI and food inflation (YoY), non-food inflation (YoY) increased during June 2009 compared to the same month last year; however it was 0.9 percentage points less than the previous month. Opposite to YoY inflation, CPI inflation (MoM) increased during June 2009 to reach 1.0 percent compared to 0.2 percent in May 2009. Both CPI food and non-food groups also showed acceleration in inflation (MoM) during June 2009. Core inflation (YoY) measured by NFNE and 20 percent trimmed mean continued on declining trend in the second half of FY09. As core inflation excludes administered and volatile prices and generally represents demand pull inflation, this decline can be attributed to demand management policies adopted during FY09. NFNE inflation (YoY) showed deceleration during June 2009 compared to the preceding month but was higher compared to June 2008. However, core inflation (YoY) measured by 20 percent trimmed mean showed decline compared to both the corresponding month last year and May 2009. On MoM basis both measures of core inflation recorded decline during June 2009. The long run trend in inflation measured by 12-month moving average shows a declining path by all three price indices (that CPI, WPI and SPI). CPI inflation (12mma) reached 20.8 percent during June 2009 compared to its peak level of 22.1 percent in March 2009. WPI and SPI inflation (12mma) decelerated to 18.2 percent and 22.7pc in June 2009 compared to 20.5pc and 24.1pc in the preceding month. WPI inflation (YoY) declined and was recorded at 4.1 percent during the month under review compared to 30.6 percent in June 2008 and 4.7 percent in May 2009. Inflation (YoY) measured by sensitive price indicator (SPI) also followed the trend in CPI and WPI. SPI inflation (YoY) showed deceleration during June 2009 and was recorded at 10.8 percent compared to 26.3pc in June 2008 and 11.0pc in May 2009.