Tuesday, March 31, 2020

Housing & utility lift inflation at 7.2% YoY

Featured

Breaking: British Prime Minister Boris Johnson tested positive for Coronavirus

British Prime Minister Boris Johnson tested positive for the coronavirus after experiencing "mild symptoms". "After seeing mild symptoms yesterday (Thursday),...

3.3 million Americans applied for unemployment benefits after the Corona outbreak

The US Department of Labor announced a record increase in the application for unemployment benefits in the United States...

World Bank asks bilateral creditors to suspend debt payments from IDA countries

The World Bank Group and International Monetary Fund have issued the following joint statement to the G20 concerning debt...
Zain Zubair
Zain Zubair
Zain Zubair is a staff writer for World News Observer. He is studying ACCA in Pakistan. Besides Accountancy and writing pieces, he loves cooking and nature photography. Zain has attended various modern journalism workshops. Contact: [email protected]
CPI for the month of Jan’19 rose 7.2%YoY as compared to an increase of 6.2%YoY registered in Dec’18. On a MoM basis, CPI incremented 1.0% in Jan’19 versus a decline of 0.4% registered in the previous month. The inflation reading arrived higher than our expectation primarily due to hike in electricity tariff (8.5%YoY).

Analysts at Pearl securities said that the housing & utilities (CPI weightage 29.4%) continues to be the largest contributor in headline inflation (11.6%YoY), mainly on the back of hike in gas (85.3%YoY) & electricity tariff (8.5%YoY), quarterly uptick in house-rent (8.2%YoY), rise in construction inputs/wages (12.6%YoY/9.3%YoY) along with increase in costs associated with water supply (12.9%YoY).

 

Moreover, transport group was another major contributor in Jan’18 headline inflation (15.0%YoY) as price of motor fuel & transport services incremented 18.1%YoY and 15.2%YoY, respectively. Moreover, increase in prices of clothing & footwear (7.2%YoY) and hike in cost of education (10.0%YoY) were also amongst major contributors in Jan’19 inflation reading.

Core inflation (i.e. non-food, non-energy) clocked in at 8.7%YoY during Jan’19 versus an increase of 8.4%YoY depicted in the preceding month. On a MoM basis, NFNE inflation arrived at 1.1% in Jan’19 versus an increase of 0.3% recorded in the previous month.

Food inflation arrived at 2.4%YoY during the month as compared to an increase of 0.9%YoY registered in Dec’18, primarily on the back of hike in the prices of food items such as spices (15.3%YoY), meat (13.6%YoY), tea (12.6%YoY), sugar (10.0%YoY), pulse moong (8.3%), milk powder (7.7%), beans (7.0%) and several other food group constituents.

With regards to inflation outlook, we estimate average headline inflation for FY19 to arrive within 7.5%-8.5% range (7MFY19 – 6.2%YoY) due to anticipated re-emergence of food inflation, higher utility rates & lagged impact of hefty Pakistani Rupee devaluation.

In terms of monetary policy outlook, State Bank of Pakistan hiked key policy rate by 25bps to 10.25% in the first monetary policy announcement of CY19. With several macroeconomic challenges such as higher oil import bill, depleting foreign exchange reserves and rising inflation truncating country’s real interest rate, analysts at Pearl securities believe SBP may hike rates further in CY19, albeit at a lower quantum in order to arrest inflationary pressure & address deteriorating macros (Twin deficit).

 

Zain Zubair
Zain Zubair
Zain Zubair is a staff writer for World News Observer. He is studying ACCA in Pakistan. Besides Accountancy and writing pieces, he loves cooking and nature photography. Zain has attended various modern journalism workshops. Contact: [email protected]

Latest News

Breaking: British Prime Minister Boris Johnson tested positive for Coronavirus

British Prime Minister Boris Johnson tested positive for the coronavirus after experiencing "mild symptoms". "After seeing mild symptoms yesterday (Thursday),...

3.3 million Americans applied for unemployment benefits after the Corona outbreak

The US Department of Labor announced a record increase in the application for unemployment benefits in the United States in the week that ended...

World Bank asks bilateral creditors to suspend debt payments from IDA countries

The World Bank Group and International Monetary Fund have issued the following joint statement to the G20 concerning debt relief for the poorest countries: The...

Turkish doctor: Turkey could have as many as 145,000 undiagnosed coronavirus cases

Dr. Muhammet Emin Akkoyunlu, a chest specialist at the Medipol University Hospital, revealed that the number of Coronavirus infections in Turkey could be around...

Time Square turns into Ghost Square after stores closes in New York, fearing Corona

Time Square is known as New York City's, USA, as one of the sleeping areas, which usually attracts more than 330,000 visitors daily, as...

Related News