CPI set to surge by 28.4% YoY: Economist Estimates

November 30, 2023 (MLN): The headline inflation for the month of November 2023 is expected to settle around 28.1% – 28.9% YoY with an average estimate of 28.41% YoY compared to 26.9% YoY in October and 23.84% YoY in the same month last year, as per the projections put forth by various brokerage houses/economists.

This would bring 5MFY24 average inflation to 28.48% as against 25.16% YoY in the corresponding period last year.

On a monthly basis, the inflation is expected to move up with an average estimate of 1.98% MoM compared to 1.1% MoM in October.

The surge in monthly inflation is attributed to the significant rise in gas tariff.

To recall, the government approved the long-overdue gas price hike on October 31 and the Oil and Gas Regulatory Authority (OGRA) issued a notification regarding the increase in natural gas sale prices and minimum charges on November 08, 2023

Accordingly, the SPI data released by the Pakistan Bureau of Statistics (PBS) this month showed that gas prices skyrocketed 480% to Rs1,711/mmbtu, from Rs295/mmbtu last month.

Moreover, the rise in prices for essential food items like fresh vegetables, onions, and potatoes is expected to contribute to a 1.1% MoM increase in food inflation for the month, according to Arif Habib Limited’s report on inflation.

Conversely, the transportation index is set to witness a 4.8% MoM decrease due to a decline in domestic petrol prices.

Outlook

Following a potential spike in December due to the high base effect, the inflation numbers are expected to exhibit a declining trend, the report added.

However, unforeseen events and conditions, such as volatility in oil and energy prices, depreciation in the Pakistani Rupee (PKR), external account pressure, and climatic unrest, can pose significant risks to the overall inflation outlook.

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