NEWS - CresBank HOUSEHOLD INFLATION INDEX

PRICES REMAIN stable

It has been a couple of months now where stability is witnessed in the prices of quintessential household food and non food items. During July 2001, News-CresBank Household Inflation Index (HII) portrayed a nominal rise of 0.36 per cent in the average prices of 33 selected items. At the end of the month, HII closed at 118.36 points moving marginally upward from end-June's 117.93 points. On an annualized basis, this rate of increase in HII during July provides an inflation of 4.31 per cent, however, on a year-on-year weekly basis, HII registered an inching up of only 1.13 per cent at the month-end.

Out of the two major components of HII, the food items' index followed the overall trend and registered an upsurge whereas the non-food items' index moved in the opposite direction by recording a decline during the month.

Food items

The food-items' index reached 119.60 points at the month-end and recorded an increase 0.86 per cent over June-end's 118.58 points. In this category of 23 items, prices of only three heavily-weighted items soared while prices of as many as 20 items showed stability during the month. This month it was onions amongst the perishables that remained the most dearer marking an increase of over 8 per cent in prices. On the other hand, there was no food item in HII that sold cheaper than last month.

Non-food items

The index of the non-food items category that gauges the movement of ten items depicted an opposite picture as it recorded a decline of 0.65 per cent during the said month. The category index dipped to 115.90 points from 116.65 points from recorded a month ago. Price of one item i.e. lawn cloth closed higher whereas price of another i.e. latha cloth declined. However, prices of the remaining eight items stayed unchanged.

Conceptual Framework of HII

The Federal Bureau of Statistics, Government of Pakistan, maintains and publishes various barometers of commodity price movements such as the Wholesale Price Index (WPI), Consumer Price Index (CPI) and Sensitive Price Index (SPI). Since the government department is measuring the inflation in the country; general public, multi-lateral agencies and credit rating companies are also interested in the inflation measurement by an independent agency. The creation of News-CresBank Household Inflation Index (HII) is the first effort in this direction.

HII is closer to the SPI as far as selection of items is concerned. The commodity basket of HII comprises 33 quintessential items that our reference group is most likely to consume.

Currently, price data for HII is collected from selected markets of Karachi.