Comparing January, it is expected that Feb’19 inflation to settle at 7.98% YoY compared to 3.80% in Feb’18 and 7.19% in Jan’19, respectively. The surge in CPI is owed to uptick in prices of food related products (Tomatoes and Chicken) which is expected to increase overall CPI given a cumulative weight of 1.79% in total CPI basket, and low base effect in SPLY.
However, a meagre decline in prices of petroleum products will remain unable to moderate rising CPI. This will take the 8MFY19 average inflation to 6.43%, which is considerably higher from 3.84% in same period last year.
On a yearly basis, increase in inflation is likely to be led by Transport (+13.6% YoY), Alcoholic Beverages & Tobacco (+12.6% YoY), Housing (+11.6% YoY), Education (+9.7% YoY) and Miscellaneous (+9.2% YoY).
Monthly Inflation to settle at 0.43%
On a monthly basis, CPI reading is expected to increase by 0.43% MoM attributable to surge in Food index by 1.11% MoM. Whereas we anticipate monthly inflation to contract by 0.16% in Feb’19 in contrast to previous seven months average monthly inflation of 0.59%.
As per three weeks Sensitive Price Index (SPI) data published by the Pakistan Bureau of Statistics (PBS), average prices of Tomatoes, Chicken, Gur, Fresh Fruits and Sugar are expected to register a jump of 118%, 8%, 2%, 2% and 1% MoM, respectively.
On the other hand, decline in prices of essential food items like Potatoes (-6% MoM), Eggs (-5% MoM) and Fresh Vegetables (-3% MoM) will keep the food index under control.