Tag: Monthly inflation

  • Pakistan’s CPI-based inflation predicted to decline to 20%

    Pakistan’s CPI-based inflation predicted to decline to 20%

    Consumer Price Index (CPI)-based inflation in Pakistan is forecasted to witness a further decline, potentially settling at approximately 20 per cent on a year-on-year (YoY) basis for March.

    This projection marks a decrease from the 23.1 per cent recorded in February, as indicated by a report from Arif Habib Limited (AHL) released on Thursday.

    The anticipated headline inflation rate for March 2024 is projected to stand at 20.2 per cent YoY, reflecting a notable downturn from the preceding month’s figure of 23.1 per cent YoY.

    AHL’s report also highlights a substantial drop compared to the same period in the previous year, March 2023, when the YoY inflation rate was registered at 35.4 per cent.

    Consequently, it is envisaged that the average CPI for the first nine months of the fiscal year 2023-24 will hover around a 27.2 per cent YoY level, consistent with the figures observed during the same period last year (SPLY), according to the brokerage house.

    On a monthly basis, AHL’s projections for March 2024 suggest a modest increase of 1.3 per cent, contrasting with the average month-on-month (MoM) rise of 1.7 per cent recorded over the first eight months of the fiscal year.

    This upturn in monthly inflation is primarily attributed to rises in key indices, notably the food index (+1.3 per cent MoM), transport index (+1.5 per cent MoM), and housing index (+2.9 per cent MoM), the report stated.

    The brokerage house attributed the increase in the food index to the impending Ramadan season, foreseeing a month-on-month surge in prices of fresh fruits, potatoes, onions, and tomatoes.

    Meanwhile, the housing index is expected to see an uptick primarily due to increases in gas tariffs and LPG prices.

    Additionally, the transport index is anticipated to remain elevated owing to a month-on-month rise in petroleum product prices, according to AHL.

  • Monthly inflation expected to ease in the coming months

    Monthly inflation expected to ease in the coming months

    In January, a discerning shift towards disinflation is anticipated, as headline inflation is poised to soften to 27.2 per cent year-over-year (YoY), attributed to a favourable base effect.

    This decline from the previous month’s 29.7 per cent is primarily influenced by a higher base in the preceding year, while monthly pressures on consumer prices are expected to persist.

    Despite the overall yearly decrease, monthly inflation is projected to rise by 0.93 per cent month-over-month (MoM), contrasting with the 12-month average of 2.2 per cent MoM. 

    Consequently, the average yearly inflation for the first seven months of fiscal year 2024 is estimated at 28.57 per cent YoY, up from 25.40 per cent YoY in the same period last fiscal year.

    The surge in monthly inflation is predominantly fueled by a rise in the food and housing index. Food inflation is expected to increase by 1.76 per cent MoM, driven by inflated prices of essential commodities such as onions, chicken, tomatoes, eggs, and pulses. 

    Meanwhile, the housing index is projected to experience a 1.54 per cent MoM increase, primarily due to quarterly rent adjustments. In contrast, the transport index is anticipated to decrease by 2.69 per cent MoM, attributed to relief in fuel prices.

    Looking ahead, a 0.5 per cent MoM inflation rate in February could result in an annual headline inflation of around 22 per cent, with a gradual decline below 16 per cent by June 2024.

    Even a 1 per cent MoM inflation rate, significantly lower than the 12-month average, is expected to maintain real interest rates from turning positive until March 2024, as illustrated in the accompanying chart depicting various monthly inflation scenarios.

    Starting in January, the disinflationary trend is expected to accelerate due to the favourable base effect, the lagged impact of monetary tightening, and other administrative measures.

    However, potential risks include unforeseen climate events, volatility in global commodity prices—especially oil—and external account pressures.

    Rising global oil prices amid geopolitical tensions pose a threat to the inflation outlook, and an additional gas price adjustment, as suggested by the International Monetary Fund (IMF), may further intensify pressure on consumer prices.

  • Pakistan records 13.8 per cent inflation in May

    Pakistan records 13.8 per cent inflation in May

    The latest data provided by the Pakistan Bureau of Statistics (PBS) on June 1, inflation continued to rise in May 2022, with the Consumer Price Index (CPI)-based reading coming in at 13.8 per cent year on year, up from 13.4 per cent the previous month and 10.9 per cent in May 2021.

    In May 2022, inflation climbed by 0.44 per cent month over month, compared to 1.6 per cent the previous month and 0.1 per cent in May 2021. This brings average inflation in 11MFY22 to 11.29 per cent year over year, up from 8.83 per cent in 11MFY21.

    Rising prices have emerged as a major source of concern for the economy of the South Asian country, which is grappling with dwindling foreign exchange reserves and a growing import bill.

    The State Bank of Pakistan (SBP) hiked the main interest rate by 150 basis points to 13.75 per cent last month in an attempt to combat economic headwinds.

    The existing administration, on the other hand, has indicated that it will partially remove subsidies by raising petroleum product tariffs by Rs30 per liter, a move that is projected to raise inflation.

    As per a report from Brecorder, on a month-on-month basis, Inflation in Urban areas increased by 0.3 per cent in May 2022 as compared to an increase of 1.6per cent in the previous month and increase of 0.2per cent in May 2021.

    In the meantime, CPI inflation in urban areas grew 12.4 per cent year over year in May 2022, compared to 12.2 per cent the previous month and 10.8 per cent in May 2021.

    It climbed by 0.3 per cent month over month in May 2022, compared to a 1.6 per cent increase the previous month and a 0.2 per cent increase in May 2021.

    In rural areas, CPI inflation climbed by 15.9per cent year over year in May 2022, compared to 15.1 per cent the previous month and 10.9 per cent in May 2021. It climbed by 0.6 per cent month over month in May 2022, compared to an increase of 1.6 per cent the previous month and a fall of -0.03 per cent in May 2021.

    In May 2022, the SPI inflation grew by 14.1 per cent year over year, compared to 14.2 per cent a month earlier and 19.7 per cent in May 2021. On a month-over-month basis, it climbed by 0.6 per cent in May 2022, compared to 1.5 per cent a month earlier and 0.8 per cent in May 2021.