47. Pakistan Economic Survey 2011-12 - Consultancy Services in ...

Table:7.6 Rate of Inflation on the basis of Food and Non-Food GroupsItems 2010-11(Jul-Apr) 2011-12(Jul-Apr)InflationA Consumer Price Index (CPI) 13.8 10.8B Food Group) 18.8 11.1C Non-food Group 10.8 10.7D Core 9.3 10.4Source: Pakistan Bureau of StatisticsFig: 7.3 Inflation by GroupsCoreNon-food GroupFood Group)CPI2011-12(Jul-Apr)2010-11(Jul-Apr)0 2 4 6 8 10 12 14 16 18 20Percentage pointsBoth supply and demand side factors areresponsible for food price escalation. Theseincluded supply disruption on account of thenatural calamities during the year as well as theincrease in transportation cost due to high fuelprices; on the demand side, the price hike is theconsequence of the inflationary gap measured asthe difference between monetary expansion andgrowth of overall national productivity.The reasons for the rising food prices are manifold.The demand and supply side factors responsiblefor the food price hike in 2007-08 also seem tocontinue in the current food price hike. Theseinclude rapid economic growth in emergingcountries leading to the increase in internationalfood demand, lower agricultural productivity dueto the scarcity of water in certain regions, supplyshort fall in the global food markets and oil supplyshocks resulting from geopolitical instability in theMiddle East etc.The non-food prices increased at a slower pace of10.7 percent than food prices. The divergent trendis due to different factors influencing these twobroad components of CPI differently, such as itemscoverage, nature of items and impact of seasonalvariation and availability etc. Among the non–fooditems, the hike in fuel related items such as diesel,petrol, gas, CNG and power tariff rates pushed theproduction and transportation cost up therebyaccelerating inflation.Core inflation which is nonfood - nonenergy isestimated at 10.4 percent during Jul-Apr 2011-12.Table-7.7: (Percent) Change In Price IndicesOn Average Basis (%) Point ContributionCommodityWeights July –Apr July –Apr July -Apr July –Apr2010-11 2011-12 2010-11 2011-12General (CPI) 100.0 13.8 10.8 13.8 10.8Food, & Non Alcoholic Beverages 34.8 18.8 11.1 6.6 3.9Alcoholic Beverages& Tobacco 1.4 11.8 7.5 0.2 0.1Non-Food 65.2 10.8 10.7 7.0 6.9103