CPI Preview 1: Inflation to ease further in Oct

October 20, 2024 (MLN): Pakistan's inflation is expected to ease further to 6.5% over the prior year in October, a deceleration compared to September's 6.9% annual gain in prices and the lowest annual rate since January 2021.

Monthly inflation is projected to rise 0.7%, slower than previously anticipated as weekly data from Pakistan Bureau of Statistics (PBS) do not show a significant jump in electricity costs.

However, if the jump in electric prices as approved by NEPRA is taken, monthly inflation is expected to surge over 2%, taking the annual rise to more than 8%.

The government raised energy prices to meet the International Monetary Fund’s conditions for a new loan. Prime Minister Shehbaz Sharif had provided relief for three months until October to pause the increase in electricity prices.

Although, weekly PBS data do not show this increase as of October 17.

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.

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

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 half of the inflation advance being driven by this.

(This story was updated with more details in the third paragraph)

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