Daily Times

Pakistan’s headline inflation rate accelerated in the month of July 2018 as Consumer Price Index (CPI) for the first month of FY19 clocked in at 5.8% year-on-year (YoY).

CPI inflation general increased by 5.8% on year-on-year basis in July 2018 as compared to an increase of 5.2% in the previous month and 2.9% in July 2017.

On month-on-month basis, it increased by 0.9% in July 2018 as compared to an increase of 0.6% in the previous month and decrease of 0.3% in July 2017.

An analyst at Shajar Research said despite low Sensitive Price Index (SPI) readings during the first two weeks of July, quarterly revision in House rent index coupled with escalating fuel prices resulted in higher month-on-month (MoM) inflation. He attributed major increase in the CPI index to Housing and Transport index.

The heavy-weight house rent index during the quarter is likely to increase by 5% YoY, while higher fuel prices lifted motor fuel prices and transport services by 5.7% and 4.98% YoY, respectively.

“We foresee CPI in the outgoing year (FY19) to settle at 5.5-6% while the recent appreciation in Pakistani Rupee against US Dollar would restrict imported inflation in the coming period. Meanwhile, further support from reserves front may also limit rising interest rates going ahead in FY19”, said the analyst.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7.6% on (YoY) basis in July 2018 as compared to an increase of 7.1% in the previous month and 5.6% in July 2017. On (MoM) basis, it increased by 1.2% in July 2018 as compared to increase of 0.3% in previous month, and an increase of 0.7% in corresponding month of last year i.e. July 2017.

Core inflation, measured by 20% weighted trimmed mean CPI (Core Trimmed) increased by 5.9% on (YoY) basis in July 2018 as compared to 5.4% in the previous month and by 4.0% in July 2017. On (MoM) basis, it increased by 0.9% in July 2018 as compared to an increase of 0.2% in the previous month and an increase of 0.4% in corresponding month of last year i.e. July 2017.

SPI inflation on YoY increased by 3.6% in July 2018 as compared to an increase of 1.9% a month earlier and a decrease of 0.4% in July 2017. On MoM basis, it increased by 1.2% in July 2018 as compared to an increase of 1.8% a month earlier and a decrease of 0.5% in July 2017.

Wholesale Price Index (WPI) inflation on YoY basis increased by 10.5% in July 2018 as compared to an increase of 7.6% a month earlier and an increase of 0.7% in July 2017. WPI inflation on MoM basis increased by 2.4% in July 2018 as compared to an increase of 1.5% a month earlier and a decrease of 0.2% in corresponding month of last year i.e. July 2017.

Published in Daily Times, August 2^nd 2018.