ISLAMABAD: The Consumer Price Index (CPI) based inflation rose 9.6 per cent in July 2012 from a year ago, the lowest since December 2009, but Pakistan Bureau of Statistics (PBS) on Wednesday cautioned the government on an increased risk of price hikes in manufacture items.

Despite inflation being at a 31-month low, the PBS said prices were likely to rise further in the coming months as inflation, which is primarily dominated by increase in food prices and/or petroleum products, was now seeing a new trend; a rise in prices of manufacture items as well.

Furthermore, prices are likely to increase due to a weak monsoon, the recent hike in petroleum prices and CNG, the rupee depreciation and energy shortages which are all likely to result in an increase in cost of production and also push up non-food inflation.

Prices traditionally also rise in Ramazan, which will be incorporated in August’s data.

The government’s borrowing from the central bank is also likely to fuel inflation further.

The government projected an inflation target of 9.5 per cent for 2012-13 fiscal year, compared with an inflation of 11.01 per cent in the previous year.

Core inflation, which is non-food and non-energy inflation, entered double digits as it rose 11.3 per cent from a year ago, which according to analysts, may make it harder for the central bank to cut interest rates when it unveils its monetary policy this month.

The State Bank of Pakistan is due to announce its monetary policy for the subsequent two months on Aug 10 and it kept its key policy rate unchanged at 12 per cent in June.

In July, total food inflation was at 8.73 per cent from a year ago, non-perishable food items witnessed a surge of 8.58 per cent and perishable items increased 9.58 per cent in July over last year.

Industrial goods recorded a massive increase during last month validating the argument of an increase in prices in the coming months.

The price of food items which registered an increase include: Onions (50.93 pc), Pulse Gram (49.95 pc), Besan (42.97 pc), Gram Whole (31.52pc), Fresh Fruits (28.01pc), Condiments (20.47pc), Beans (20.26pc), Honey (20.12pc), Cigarettes (18.20pc), Milk Powder (17.67pc), Chicken (14.59pc) and Rice (14.53 pc).The non-food prices that rose in July over last year include: text books (40.60 pc), household servant (35.04 pc), motor vehicle tax (28.73 pc), doctor (MBBS) clinic fee (25.53 pc), utensils (23.85 pc), firewood whole (23.81 pc), marriage hall charges (20.50 pc) and Dopatta (20.39 pc).

Housing, water, electricity, gas and fuel rose by 5.60 per cent and health care cost increased by 15.59 per cent in July over the same month last year.

Transportation fare increased by 12.57 per cent mainly due to an increase in the price of diesel, petrol and CNG filling charges.

The PBS statistics showed that the inflation measured through sensitive price index was up by 7.67 per cent in July and inflation in the wholesale manufactured products also increased 7.22 per cent over July last year.