December 2, 2019 (MLN): Most expectedly, today, we have an all-important release of CPI for the month of November from Pakistan Bureau of Statistics (PBS), which is likely to attract attention.
Here are the expectations of analysts from several brokerage houses for the CPI figures, based on previous performance and current economic factors. The projections of these research houses are listed below:
|
CPI Forecasts for November 2019 |
||
|---|---|---|
|
Brokerage House |
Forecast (in %), YoY |
Forecast (in %), MoM |
|
Pearl |
12.40% |
1.30% |
|
Spectrum |
12.49% |
1.15% |
|
AKD Securities |
12.34% |
1.05% |
|
Sherman |
12.00% |
0.80% |
|
Insight Securities |
12.82% |
1.49% |
|
Ismail Iqbal Securities |
12.10% |
0.90% |
|
Al Habib Capital Markets |
12.76% |
1.42% |
|
Arif Habib Limited |
12.51% |
1.20% |
|
Foundation |
12.20% |
0.90% |
|
Aba Ali Habib |
12.57% |
1.28% |
|
Summit Capital |
12.60% |
1.30% |
|
WE Research |
12.60% |
1.30% |
|
EFG Hermes |
12.40% |
– |
|
Range |
12%-12.82% |
0.8%-1.49% |
|
Mean |
12.45% |
1.17% |
|
Median |
12.49% |
1.24% |
|
Mode |
12.40% |
1% |
In line with market consensus, it is expected that the CPI figures to clock in within a range of 12% – 12.82% with an average value of 12.45% YoY in November 2019, as compared to 5.6% YoY in the same period last year and 11.1% YoY in the month of October 2019.
These inflation forecasts are attributable to many factors which include: increase in food index especially upsurge in prices of tomatoes and onion due to temporary supply-side disruption and input costs, an upward adjustment in electricity and gas tariffs and a hike in prices of imported goods due to PKR depreciation.
Moreover, National CPI is likely to be pushed by an increase in house rent and utilities along with rising construction input and wages as per Pearl Securities.
However, stable POL product prices and absence of any unfavourable increase in other heads, keep the inflation pace in check.
As the new base CPI includes RPI and UCPI, therefore, as per Ismail Iqbal Securities’ calculations, urban CPI inflation (UCPI) (60% of NCPI) and rural CPI inflation (RCPI) (40% of NCPI) are expected to increase by 11.8% YoY and 12.7% YoY respectively.
Regarding monetary policy implications, the State Bank of Pakistan kept the policy rate unchanged at 13.25% in the last MPC meeting. However, the high expected inflation till early next year may refrain SBP from reducing policy rates until Feb 2020 owing to low base effect and inversion of the yield curve.
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