SBP says 11.3 percent food inflation ''very high''

Food inflation has touched the highest peak of current year at 11.3 percent during May as against 5.6 percent during the same period of last year. This increase has been attributed to reversal of inflation from negative to positive in some key food items, which include vegetables, fruits, eggs, chicken and different varieties of rice.
State Bank of Pakistan (SBP) has issued inflation monitor for May, which shows that food inflation during the current month has increased by 5.7 percent (over 100 percent increase) as against May 2006.
After this upsurge, food inflation has reached the highest level of the current year during May. Earlier in March, it was 10.7 percent while it stood at 10 percent in February. Statistics show that during May, food inflation was also 1.9 percent higher than in April 2007, as it increased from 9.4 percent in April to 11.3 percent in May.
The SBP said that high food inflation was mainly due to reversal of inflation from negative to positive rates in some key food items, including vegetables, fruits, eggs, chicken, different varieties of rice.
On monthly basis, out of 124 items, 49 items showed decline or no change, 50 items showed increase of up to five percent, seven items showed five to 10 percent and four items showed above 10 percent increase, out of which one item, tomato, showed 120 percent increase.
Some 39 commodities, including eggs, fruits, cooking oil, different varieties of rice, chicken and some vegetables exhibited inflation in the range of 10 to 50 percent in May.
In fruits, prices of plum (Aloo Bukhara), kinnow and tomatoes were pushed by 120 percent, 132 percent and 222 percent respectively during May. On the other hand, inflation (YoY) of 16 commodities like potatoes, green chillies, sugar, ginger, onion, pulse moong and peas either declined or remained the same during the month, the SBP said, and added that rest of the items, having a weight of 39 percent in the food group, exhibited subdued or moderate inflation.
There was an increase in the average price of food items like wheat flour, fresh milk, vegetable ghee, beef and onion, whereas prices of sugar, pulse gram and chicken showed decline during May as compared to prices in April.
The SBP said that in food group, the most important raise was observed in the price of tomatoes that showed a steep YoY increase of more than 200 percent in May and among the selected food items, tomatoes were the most volatile item over the last two years.
On the other hand, during May, the CPI inflation was recorded at 7.4 percent, depicting a rise of 0.3 percent points as compared to 7.1 percent in the corresponding month last year.
The main contributing factor for the rise in overall CPI inflation is food inflation, which was 5.7 percent, more than that of the same month of last year. Non-food YoY inflation decelerated for the third consecutive month and recorded 4.7 percent inflation in May.
Monthly CPI inflation also witnessed increase of 0.9 percent, which was more than the five-year average of monthly increase in May. The SBP said that the extent of one-month increase in food inflation was very high at 1.8 percent as compared to zero inflation in May 2006 and the five-year average monthly food inflation, which was also zero.
Core inflation, based on NFNE (non-food non-energy), declined to 4.7 percent in May from 6.6 percent in May 2006 on YoY basis. Similarly, core inflation, based on 20 percent trimmed-mean, also showed a decline from 6.0 percent in May 2006 to 5.6 percent in May this year.