Its a terrible time to sit on Takht-e-Lahore. No, we aren simply referring to the political and security challenges faced by the ruling party. The soaring food prices haven been making life any easier. By the end of October 2014 (the last available city-wise inflation numbers), food inflation was the highest in Lahore in comparison to Pakistans other provincial capitals.
The Inflation Monitor released recently by the State Bank of Pakistan (SBP) shows food inflation in Lahore stood at 9 percent year-on-year in October 2014, at a time when national measure of food inflation stood at 5.2 percent - the lowest since the CPI index was recomposed. This should be particularly worrisome for CM Punjab considering that the 9 percent food inflation comes despite the high base that was set in October 2013.
In contrast, food inflation in Quetta has been the lowest at 4.9 percent - 300 basis points lower than the national average. Quetta also has the lowest non-food inflation, of which the biggest component is housing, water, electricity, gas and fuels. Ergo, intuitively the tapering off of non-inflation in Quetta is because of slowing house rent that has a 21 percent weight in the CPI basket. Though of course, this comes in tandem with the fall in transport fuel prices evident across all the provincial capitals.
While Quetta has the lowest non-food inflation, it is actually Islamabad that saw the biggest year-on-year drop in non-food inflation in October 2014, as Islamabads house rent index has likely seen a flattish change in its quarterly adjustment. A short BR Research survey of Islamabad-based real estate agents reveals that house rents have remained flat over the last three to four months, and in fact have come down in some parts of city on account of the political crisis over alleged electoral rigging.
However, following the unfortunate event in Peshawar that took the lives of 130 plus innocent souls, another wave of migration can be expected from Peshawar and others parts of Khyber Pakhtunkhwa to Islamabad (as has been the case in recent past) which in turn is likely stoke house rents in the capital. How will Novembers steep fall in CPI reflect across the major cities....this column would inform its readers when the SBP releases its next Inflation Monitor.