Assignment No.

2
MB140400114 Shahid Gulzar

SOLUTION:
1. Requirement: Calculate mean and standard deviation of inflation of each item over the whole year.

Sr.
No. N N=13 Mean Standard Deviation
Standard Deviation of Inflation over
Mean of Inflation over the S2= (X-X)2/N- the whole year
N Total (X) whole year = X/N 1 = (X-X)2/N-1
1 General (X) 643.40 49.49 64.56 8.03
2 Food &Non Alcoholoic Beverages (X) 635.20 48.86 145.43 12.06
3 Alcoholic Beverages & Tobacco (X) 516.80 39.75 1007.39 31.74
4 Clothing & Footwear (X) 756.00 58.15 335.51 18.32

5 Housing Water,Elect., Gas & Other Fuels (X) 447.20 34.40 537.72 23.19
6 Furnishing & Houshold Equip. Maintenance etc. (X) 994.30 76.48 988.87 31.45
7 Health (X) 645.60 49.66 160.57 12.67
8 Transport (X) 476.60 36.66 342.34 18.50
9 Communication (X) 166.60 12.82 1649.93 40.62
10 Recereation & Culture (X) 341.00 26.23 798.19 28.25
11 Education (X) 231.50 17.81 1842.29 42.92
12 Restaurant & Hotels (X) 916.80 70.52 903.05 30.05
13 Miscellaneous (X) 868.60 66.82 461.65 21.49
2. Requirement: Calculate month wise mean inflation of all items in each month.

Sr.
No. N 1 2 3 4 5 6 7 8 9 10 11 12 13
2018- 2018- 2018- 2018- 2018- 2018- 2018- 2019- 2019- 2019- 2019-
2018-Sep 2019-Jan
N May June July Aug Oct Nov Dec Feb March April May
1 General (X) 40.60 31.50 47.80 47.70 45.90 62.40 52.70 53.10 51.30 43.60 58.30 53.20 55.30
Food &Non Alcoholoic
2 46.30 30.10 60.90 46.50 32.20 54.30 35.00 49.60 62.30 51.80 71.70 44.50 50.00
Beverages (X)

3 Alcoholic Beverages & 16.70 33.30 16.70 0.00 33.30 100.00 66.70 0.00 66.70 66.70 50.00 50.00 16.70
Tobacco (X)
4 Clothing & Footwear (X) 32.20 50.80 35.60 45.80 67.80 61.00 79.70 81.40 61.00 42.40 62.70 61.00 74.60

5 Housing Water,Elect., Gas 27.80 36.10 47.20 44.40 75.00 38.90 16.70 41.70 13.90 19.40 44.40 25.00
16.70
& Other Fuels (X)
Furnishing & Houshold
6 Equip. Maintenance etc. 69.60 37.70 63.80 79.70 76.80 91.30 91.30 84.10 79.70 84.10 71.00 82.60 82.60
(X)
7 Health (X) 33.30 25.60 41.00 51.30 48.70 69.20 53.80 53.80 48.70 42.10 47.40 61.50 69.20
8 Transport (X) 34.90 30.20 55.80 39.50 25.60 41.90 39.50 48.80 20.90 9.30 48.80 34.90 46.50
9 Communication (X) 0.00 0.00 8.30 16.70 8.30 41.70 41.70 0.00 8.30 8.30 16.70 8.30 8.30
10 Recereation & Culture (X) 15.40 5.10 28.20 23.10 20.50 35.90 28.20 12.80 17.90 12.80 51.30 51.30 38.50
11 Education (X) 18.80 6.30 0.00 0.00 68.80 31.30 0.00 25.00 -25.00 0.00 62.50 43.80 0.00
12 Restaurant & Hotels (X) 66.70 50.00 33.30 100.00 50.00 66.70 66.70 100.00 66.70 66.70 100.00 83.30 66.70
13 Miscellaneous (X) 65.70 42.90 62.90 60.00 77.10 82.90 71.40 74.30 74.30 71.40 60.00 48.60 77.10
Total (X) 468.00 379.60 501.50 554.70 571.70 813.60 665.60 599.60 574.50 513.10 719.80 667.40 610.50
Month wise mean
inflation of all items= 36.00 29.20 38.58 42.67 43.98 62.58 51.20 46.12 44.19 39.47 55.37 51.34 46.96
N=13 X/N
3. Requirement: Make a line chart/graph of Health, transport and education of whole year.

2018- 2018- 2018- 2018- 2018- 2018- 2018- 2019- 2019- 2019- 2019- 2019-
May June July Aug 2018-Sep Oct Nov Dec Jan Feb March April May
Health 33.30 25.60 41.00 51.30 48.70 69.20 53.80 53.80 48.70 42.10 47.40 61.50 69.20
Transport 34.90 30.20 55.80 39.50 25.60 41.90 39.50 48.80 20.90 9.30 48.80 34.90 46.50
Education 18.80 6.30 0.00 0.00 68.80 31.30 0.00 25.00 -25.00 0.00 62.50 43.80 0.00

80.00

60.00

40.00

Health

20.00 Transport
Education

0.00

-20.00

-40.00
Sr.
No. N 1 2 3 4 5 6 7 8 9 10 11 12 13 N=13
Mean Standard
of Deviation
Inflati of
on Inflation
over over the
the S2= whole
whole (X- year
2018- 2018- 2018- 2018- 2018- 2018- 2018- 2019- 2019- 2019- 2019- 2019- year = X)2/N = (X-
N 2018-May June July Aug Sep Oct Nov Dec Jan Feb March April May Total (X) X/N -1 X)2/N-1
1 General (X) 40.60 31.50 47.80 47.70 45.90 62.40 52.70 53.10 51.30 43.60 58.30 53.20 55.30 643.40 49.49
Total
X-X -8.89 -17.99 -1.69 -1.79 -3.59 12.91 3.21 3.61 1.81 -5.89 8.81 3.71 5.81 =X-X)
(X-X)2 79.03 323.64 2.86 3.20 12.89 166.67 10.30 13.03 3.28 34.69 77.62 13.76 33.76 774.73 64.56 8.03
Food &Non
Alcoholoic
2 Beverages (X) 46.30 30.10 60.90 46.50 32.20 54.30 35.00 49.60 62.30 51.80 71.70 44.50 50.00 635.20 48.86
X-X -3.19 -19.39 11.41 -2.99 -17.29 4.81 -14.49 0.11 12.81 2.31 22.21 -4.99 0.51
145.4
(X-X)2 10.18 375.97 130.19 8.94 298.94 23.14 209.96 0.01 164.10 5.34 493.28 24.90 0.26 1745.21 3 12.06
Alcoholic
Beverages &
3 Tobacco (X) 16.70 33.30 16.70 0.00 33.30 100.00 66.70 0.00 66.70 66.70 50.00 50.00 16.70 516.80 39.75
X-X -32.79 -16.19 -32.79 -49.49 -16.19 50.51 17.21 -49.49 17.21 17.21 0.51 0.51 -32.79
1075.1 2449.2 2551.2 2449.2 1007.
(X-X)2 1075.18 262.12 8 6 262.12 6 296.18 6 296.18 296.18 0.26 0.26 1075.18 12088.64 39 31.74
4 Clothing & 32.20 50.80 35.60 45.80 67.80 61.00 79.70 81.40 61.00 42.40 62.70 61.00 74.60 756.00 58.15
 Footwear (X)
X-X -17.29 1.31 -13.89 -3.69 18.31 11.51
30.21 31.91 11.51 -7.09 13.21 11.51 25.11
1018.2 335.5
(X-X)2 298.94 1.72 192.93 13.62 335.26 132.48 912.64 5 132.48 50.27 174.50 132.48 630.51 4026.08 1 18.32
Housing
Water,Elect., Gas
5 & Other Fuels (X) 27.80 36.10 47.20 44.40 16.70 75.00 38.90 16.70 41.70 13.90 19.40 44.40 25.00 447.20 34.40
X-X -21.69 -13.39 -2.29 -5.09
-32.79 25.51 -10.59 -32.79 -7.79 -35.59 -30.09 -5.09 -24.49
1075.1 1266.6 537.7
(X-X)2 470.46 179.29 5.24 25.91 1075.18 650.76 112.15 8 60.68 5 905.41 25.91 599.76 6452.59 2 23.19
Furnishing &
Houshold Equip.
Maintenance etc.
6 (X) 69.60 37.70 63.80 79.70 76.80 91.30 91.30 84.10 79.70 84.10 71.00 82.60 82.60 994.30 76.48
X-X 20.11 -11.79 14.31 30.21 27.31 41.81 41.81 34.61 30.21 34.61 21.51 33.11 33.11
1748.0 1748.0 1197.8 1197.8 988.8
(X-X)2 404.41 139.00 204.78 912.64 745.84 8 8 5 912.64 5 462.68 1096.27 1096.27 11866.40 7 31.45
7 Health (X) 33.30 25.60 41.00 51.30 48.70 69.20 53.80 53.80 48.70 42.10 47.40 61.50 69.20 645.60 49.66
X-X -16.19 -23.89 -8.49 1.81 -0.79 19.71 4.31 4.31 -0.79 -7.39 -2.09 12.01 19.71
160.5
(X-X)2 262.12 570.73 72.08 3.28 0.62 388.48 18.58 18.58 0.62 54.61 4.37 144.24 388.48 1926.79 7 12.67
8 Transport (X) 34.90 30.20 55.80 39.50 25.60 41.90 39.50 48.80 20.90 9.30 48.80 34.90 46.50 476.60 36.66
X-X -14.59 -19.29 6.31 -9.99 -23.89 -7.59 -9.99 -0.69 -28.59 -40.19 -0.69 -14.59 -2.99
1615.2 342.3
(X-X)2 212.87 372.10 39.82 99.80 570.73 57.61 99.80 0.48 817.39 4 0.48 212.87 8.94 4108.11 4 18.50
Communication
9 (X) 0.00 0.00 8.30 16.70 8.30 41.70 41.70 0.00 8.30 8.30 16.70 8.30 8.30 166.60 12.82
X-X -49.49 -49.49 -41.19 -32.79 -41.19 -7.79 -7.79 -49.49 -41.19 -41.19 -32.79 -41.19 -41.19
1696.6 1075.1 2449.2 1696.6 1696.6 1649.
(X-X)2 2449.26 2449.26 2 8 1696.62 60.68 60.68 6 2 2 1075.18 1696.62 1696.62 19799.21 93 40.62
10 Recereation & 15.40 5.10 28.20 23.10 20.50 35.90 28.20 12.80 17.90 12.80 51.30 51.30 38.50 341.00 26.23
 Culture (X)
X-X -34.09 -44.39 -21.29 -26.39 -28.99 -13.59 -21.29 -36.69 -31.59 -36.69 1.81 1.81 -10.99
1346.1 1346.1 798.1
(X-X)2 1162.13 1970.47 453.26 696.43 840.42 184.69 453.26 6 997.93 6 3.28 3.28 120.78 9578.24 9 28.25
11 Education (X) 18.80 6.30 0.00 0.00 68.80 31.30 0.00 25.00 -25.00 0.00 62.50 43.80 0.00 231.50 17.81
X-X -30.69 -43.19 -49.49 -49.49 19.31 -18.19 -49.49 -24.49 -74.49 -49.49 13.01 -5.69 -49.49
2449.2 2449.2 2449.2 5548.7 2449.2 1842.
(X-X)2 941.88 1865.38 6 6 372.88 330.88 6 599.76 6 6 169.26 32.38 2449.26 22107.46 29 42.92
Restaurant &
12 Hotels (X) 66.70 50.00 33.30 100.00 50.00 66.70 66.70 100.00 66.70 66.70 100.00 83.30 66.70 916.80 70.52
X-X 17.21 0.51 -16.19 50.51 0.51 17.21 17.21 50.51 17.21 17.21 50.51 33.81 17.21
2551.2 2551.2 903.0
(X-X)2 296.18 0.26 262.12 6 0.26 296.18 296.18 6 296.18 296.18 2551.26 1143.12 296.18 10836.64 5 30.05
13 Miscellaneous (X) 65.70 42.90 62.90 60.00 77.10 82.90 71.40 74.30 74.30 71.40 60.00 48.60 77.10 868.60 66.82
X-X 16.21 -6.59 13.41 10.51 27.61 33.41 21.91 24.81 24.81 21.91 10.51 -0.89 27.61
1116.2 461.6
(X-X)2 262.76 43.43 179.83 110.46 762.31 3 480.05 615.54 615.54 480.05 110.46 0.79 762.31 5539.75 5 21.49
Total (X) 468.00 379.60 501.50 554.70 571.70 813.60 665.60 599.60 574.50 513.10 719.80 667.40 610.50
Month wise mean
inflation of all 42.921887
N=13 items= X/N 36.00 29.20 38.58 42.67 43.98 62.58 51.20 46.12 44.19 39.47 55.37 51.34 46.96 68
12.06
4. Requirement: Based on the graph and values received of mean and standard deviation, how
would you comprehend the inflation in Pakistan? You are required to jot down 5 most valid points.

The State Bank of Pakistan is dedicated to a monetary policy which has the primary objective of
upholding price constancy in Pakistan. Price constancy has been defined as a year-on-year increase in
the Consumer Price Index in Pakistan. To achieve the major objective of price stability, it should be
significant to understand the difference among variations in price tendencies and shockwaves to
inflation. It should also keep in mind to analyze the trends of inflation to understand the conditions and
predict that how much new data is granting the decisions makers to predict better and short term price
indications and how much the shockwaves of inflation will be retaliated by the other market factors to
gain the desire level of inflation.
Risk measurement is very significant tool for inflation and economic growth forecasting. Mean and
standard deviation is the key tools to comprehend and elaborate the inflation data and forecasting.
In the above given schedule of inflation values from May-2018 to May-2019, the mean and standard
deviation of each item over the whole year depict the picture of inflationary risks in consumer price
index.
The education sector shows very volatile and high standard deviation, which results in low investments
from the Government in public education projects. This highest standard deviation is record over the
whole year is 42.92 which is highest among all items of the given inflation schedule.
The standard deviation of General items is the lowest which is just 8.03 over the whole year. After that,
food and non-alcoholic beverages industry is seems to be enjoying more profits over the whole year with
the standard deviation of 12.06 which is tempting the investors to invest in the industry of Food and
non-alcoholic beverages.