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Feb inflation up 13.04pc YoY
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Analysts see room for rate cut
Slows down for first time in 4 months
ISLAMABAD: Country's Consumer Price Index (CPI) rose 13.04 per cent in February from a year ago, the Federal Bureau of Statistics (FBS) said on Thursday.
Prices rose lower than analysts' expectations. Data showed inflation in Feb slowed down for the first time in four months, giving State Bank of Pakistan (SBP) room to cut interest rates and support economic growth.
The CPI was up 0.39 per cent over January 2010. "Even though inflation is rising at a slower pace, SBP is likely to keep its policy unchanged until inflation comes down even further," said Khalid Iqbal, director at Invest and Finance Securities.
The SBP said on Tuesday it would announce monetary policy for April and May on March 27.
The bank kept its key policy rate unchanged at 12.5 per cent in January when it unveiled monetary policy for February and March to keep inflation in check.
Using 2000/01 as the base year, the CPI index stood at 216.93 in February against 216.09 in January.
"As the exogenous price shock coming from the increase in domestic utility prices normalizes, it can potentially create greater room for a reduction in interest rates" in the second half of this fiscal year, according to a March 4 report by Asad Farid, head of research at AKD Securities Ltd. in Karachi. Inflation accelerated in January after an increase in electricity and gas tariffs. Government wants to keep borrowing costs low to revive consumer and investment demand, derailed by terrorist attacks that claimed 3,000 lives in 2009. Risks to economic growth have "increased considerably" due to the country's deteriorating security situation, according to the central bank.-Agencies
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