Reports that consumer prices are still sticky don come as a surprise. But the fact that factors other than higher food and fuel prices are at play, should make economy watchers sit up and become cautious.
Data released by the Federal Bureau of Statistics show that year-on-year CPI inflation eased to three-month low of 12.91 percent in March taking the year-to-date number to 11.28 percent.
The 1.25 percent month-on-month hike in consumer prices came mainly on account of sharp increases in fuel and food prices.
According to FBS data, transportation and communication costs jumped 3.35 percent in March, as the bureau, in line with its past practices, pre-incorporated the changes in domestic fuel prices, which were essentially effective from April 1.
In the meanwhile, food continued to become dearer, inflating by 14.54 percent on year-on-year basis. Prices of perishable food items raced faster than that of non-perishable items in March - rising 6.55 percent and 1.21 percent respectively over February 2010.
The fact that the 1.8 percent month-on-month surge in food prices comes a month after fuel prices were increased in March, creates fears that the fuel price hike is gradually taking its toll, along with other factors.
And if global crude oil prices continue to behave aggressively, then the second round of inflation as recently feared by the central bank could become a reality from being a possibility at the moment.
But there are other reasons to fear that as well.
Core CPI - which strips out energy and food costs - eased to 9.9 percent, its lowest in this fiscal year. But the trimmed core inflation continued to rise indicating that "inflationary pressures are strengthening in the economy," according to SBPs last economic review.
This means there is little hope for a policy rate cut in the short to medium term. There is simply no room to be complacent, despite the need to increase supply of credit to private sector on urgent basis.
The cost of food, fuel and electricity are the key factors to watch in the remaining part of the year.
The way black gold has been moving in international markets, global economies can be knocked out easily. Plus, the 1.65 percent month-on-month jump in wholesale food prices in March, demands caution.
And though, elimination of power subsidies may be deferred on fears of a political backlash and widespread public unrest, increases in electricity tariffs as demanded by the IMF, may just break the camels back.