Inflation remains at single digit

The effectiveness of policy measures in place was visible as the economy showed signs of further improvement with interest rates adjusting downwards albeit with a lag, and private sector credit picking up during the last quarter of 2013.

In January 2014, inflation continued to remain at single digit levels for the 60th consecutive month, and is expected to remain comfortably at these levels throughout 2014 supported by well managed demand conditions and improved domestic supply.

Headline inflation moderated further, recording 4.4 percent (year-on-year) for January 2014 from 4.7 percent (y-o-y) in December 2013.Core inflation showed some increase, recording 3.5 percent (y-o-y) in January 2014.Provisional data available for December 2013 showed that the growth of credit extended to the private sector by commercial banks bottomed out, with its year-on-year growth accelerating marginally to 7.5 percent from 7.3 percent in the previous month.

The quarterly survey on commercial bank loans and Advances depicted a robust growth in accommodation provided to Industry and Services sectors facilitating the growing economic activities.

Accordingly outstanding loans and advances granted to Industry and Services sectors by commercial banks recorded a growth of Rs. 200 billion in 2013 compared to the increase of Rs. 167 billion in the previous year. However, agriculture and consumption related pawning advances declined. Going forward, private sector credit is expected to record a growth of around 16 percent in 2014, with overall broad money (M2b) growth of around 14 percent.