The Economic Co-ordination Committee (ECC) of the Cabinet was informed that Pakistan has been experiencing higher inflationary pressure in the region, it is learnt. Sources said that Ministry of Finance gave a presentation to the last meeting of ECC on economic indicators with regional comparison on inflation.
The regional comparison shows that Pakistan's year-on-year overall CPI inflation rate rose to 13.8 percent in July 2011 compared to 7.5 percent in Sri Lanka and 6.5 percent in China, while India's last published figure was 9.4 percent for the month of June 2011, and Bangladesh 10.2 percent.
The ECC was informed that inflationary pressure had escalated over the past few months, driven by a combination of factors, including food inflation caused mainly by upward adjustments in energy prices, hike in international commodity prices, increase in freight and transport charges and short-term disruptions in the agriculture post-floods supply chain.
As noted, year-on-year CPI based inflation was estimated at 13.8 percent in July 2011. Food inflation was 17.6 percent and contributed 7.1 percentage points (or 53.6 percent) to inflation in July, while non-food inflation registered 10.6 percent, and contributed approximately 6.3 percentage points (or 47.6 percent) to CPI inflation.
Major contributors to year-on-year inflation in July 2011 (vs July 2010), were Energy (0.9 percent), House Rent (2.1 percent), Vegetable Ghee (1.0 percent), and Fresh Milk (1.4 percent). The ECC was informed that the stock of wheat as on June 20, 2011 amounted to 9.20 million tons as against 10.73 million tons in the same period last year. The total reported stock of sugar in the country as on August 1, 2011 was slightly over 1,669,427 metric tons, compared to 1,055,486 metric tons last year (09 Aug, 2010). The stock of various POL products averaged 19 days on August 12, 2011 compared to 15 days on August 11, 2010.
Latest economic indicators depicted mixed signs and production in the Large Scale Manufacturing (LSM) sector, for the first time in five month, contracted by 2.3 percent in May 2011. A decrease in output in Cement, Petroleum Products, Pig Iron, Fertilisers (Nitrogenous) and Automobile (Trucks & Cars and Jeeps) were the principal contributing factors to the overall fall in LSM. Export growth increased by 28 percent while import increased by 14 percent thus trade deficit on Year on Year basis was 1.8 percent during the month of July, 2011.
The meeting was informed that workers' remittances amounted to $1,096 million in July 2011-12 against $791 million in 2010-11, showing an increase of 38.6 percent. Saudi Arabia, UAE, and UK were the largest source of increase in workers remittances. Pakistan's economy witnessed first surplus in last five years. The current account surplus of $542 million on the back of strong exports and remittances growth helped building up foreign exchange reserves beyond $18 billion. Gross foreign exchange reserves (including FCA deposits with scheduled banks) stood at $17.9 billion as on August 12, 2011.