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Pakistan: CPI expected at 9.32% YoY in Jun’19, Policy Rate to Increase by 100 bps

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Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com
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Analysts expect Jun’19 Consumer price index (CPI) inflation to settle at 9.32% YoY compared to 5.21% in Jun’18 and 9.11% in May’19, respectively. The uptick in CPI will be owed to i) increase in price of MoGas by PKR 4.50/liter (augmenting CPI by 18bps), ii) surge in prices of clothing items on account of PKR depreciation, and iii) uptick in prices of food related products specially Wheat Flour, Potatoes, Fresh Vegetables, and Sugar. This will take the FY19 average inflation to 7.36% compared to 3.92% in SPLY. On a yearly basis, increase in inflation will likely be led by Transport (+17.0% YoY), Alcoholic Beverages & Tobacco (+14.0% YoY), Housing (+10.0% YoY), and Food (+8.6% YoY).

Monthly Inflation to settle at 0.76%

On a MoM basis, Consumer price index (CPI) reading is expected to increase by 0.76% attributable to surge in Transport Index (+3.14% MoM), Clothing & Footwear Index (+1.38% MoM), and Food index (+0.96% MoM). As per three weeks Sensitive Price Index (SPI) data published by the Pakistan Bureau of Statistics (PBS), average prices of Potatoes, Pulse Moong, Gur, Wheat Flour, Sugar, and Fresh Vegetables are expected to register a jump of 22%, 7%, 7%, 5%, 5% and 4% MoM, respectively. On the other hand, decline in prices of essential food items like Tomatoes (-13% MoM), Chicken (-10% MoM) and Onions (-9% MoM) is expected to keep the food index restrained.

Read also: Pakistan: MPS announced, policy rate up by 150 bps to 12.25 percent

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