CPI Preview 2: Inflation to quicken for first time in four months

October 20, 2024 (MLN): Pakistan’s inflation is expected to quicken for the first time in four months as electricity costs surge.

Headline inflation is likely to rise 7.0% over the prior year in October, an acceleration compared to September's 6.9% annual gain in prices but significantly lower than the 26.8% rise in October last year.

Monthly inflation is projected to rise 1.2% amid a jump in food and electricity prices.

Housing and energy inflation will continue to remain the most disappointing aspect of October's inflation. It remains the largest contributor to the overall advance in the CPI, with more than 60% of the inflation advance being driven by this.

The index has likely surged 4.1% from last month due to quarterly rent adjustment and a withdrawal of subsidy provided by the government for three months until October to pause the increase in electricity prices.

Meanwhile, Food costs that drove the headline inflation to record levels last year have likely turned negative. Prices are expected to have declined 0.1% from last year.

Transport inflation is expected to fall a significant 6.3% from a year ago as a plunge in global prices and a stable exchange rate allowed the government to slash fuel prices.

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