Inflation widely seen to ease to 79-month low in Nov

November 30, 2024 (MLN): Pakistan’s inflation for the outgoing month of November is expected to ease significantly with an average estimate of 4.7% YoY compared to 7.2% YoY in the previous month and 29.2% YoY in November 2023, as per the projections put forth by various brokerage houses/analysts.

This would mark the lowest yearly price gain since April 2018—79 months ago, to be precise.

This would bring 5MFY25 average inflation to around 7.9%, compared to 28.6% during same period last year.

On a monthly basis, the inflation is expected to move up with an average estimate of 0.4% compared to the 1.2% rise of last month and the last 12-month average increase of 0.62%.

Brokerage House Arif Habib Limited reported that food inflation is anticipated to rise by 0.1% MoM and 0.1% YoY, primarily due to a 0.2% MoM uptick in wheat flour prices, alongside significant price hikes in fish, eggs, cooking oil, pulse moong, and tomatoes.

Conversely, prices for chicken, bananas, and onions are expected to decline by 14.3%, 4.9%, and 3.6% MoM, respectively.

The transport index is anticipated to increase by 1% MoM driven by higher petrol and diesel prices, though it remains down by 2.5% YoY.

The electricity index, however, is expected to decline by 1.1% MoM, driven by a negative FCA of Rs1.28/KWh for Sep’24, which will fall in Nov’24 bills. In comparison, the FCA for the previous month was Rs-0.86/KWh, said Arif Habib.

It further noted that the housing index is projected to inch up by 0.1% MoM. Meanwhile, the prices of LPG and firewood are expected to increase by 8.3% and 2.7% MoM, respectively.

The MPC highlighted its expectations that average inflation for FY25 will be significantly lower than its previous forecast range of 11.5–13.5% in its November meeting.

The Committee also assessed that this outlook is subject to multiple risks, such as escalation in the Middle East conflict, recurrence of food inflation pressures, ad hoc adjustments in administered prices, and implementation of contingency taxation measures to meet revenue shortfalls.

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