Analysts at Arif Habib Limited expect Jan’19 inflation to settle at 7.15% YoY compared to 4.42% in Jan’18 and 6.17% in Dec’18, respectively. The uptick in CPI is due to increase in prices of fresh vegetables (Garlic; 1.71% weight in overall CPI) which is expected to increase overall CPI by 41bps and 110bps MoM to CPI food index, and quarterly review of house rent index which is expected to increase by 1.50% QoQ.
However, decline in price of MoGas by 4.86/liter is expected to keep the inflation subdued. This will take 7MFY19 average inflation to 6.20%, almost twice that of last year’s level of 3.85%. On a yearly basis, increase in inflation is likely to be led by Transport (+14.0% YoY), Beverages & Tobacco (+13.4% YoY), Education (+10.7% YoY), Housing (+9.4% YoY), and Miscellaneous (+9.4% YoY).
Monthly Inflation to settle at 0.96%
On monthly basis, CPI reading is expected to increase by 0.96% MoM attributable to surge in Food index (+1.72% MoM), and Housing Index (1.06% MoM).
As per four weeks Sensitive Price Index (SPI) data published by Pakistan Bureau of Statistics (PBS), average prices of Tomatoes, Fresh Vegetables, Fresh Fruits, Sugar, and Meat are expected to register a surge of 47%, 26%, 6%, 5% and 3% MoM, respectively.
On the other hand, decline in prices of essential food items like Chicken (-21% MoM) and Potatoes (-14% MoM) is expected to keep the food index restrained.