By Syed Wahaj Ahmed
Pakistan’s CPI inflation clocked in at 28.34% YoY in Jan-2024 compared to 29.66% in Dec-2023. This came higher than industry expectations due to increase in food prices and electricity charges.
On a MoM basis, CPI inflation increased by 1.8% in Jan-2024 compared to increase of 0.8% in Dec-2023. This MoM rise in inflation is also higher than last 3 months average of 1.5%.
In 7MFY24 average inflation clocked in at 28.73% compared to 25.40% in 7MFY23.
Core inflation (NFNE) in Urban areas declined to 17.8% YoY in Jan 2024 vs 18.2% YoY witnessed last month. However MoM inflation increased by 1.1% in Jan 2024 compared to 0.8% in Dec 2023.
Core inflation in Rural areas declined to 24.6% in Jan 2024 vs 25.1% in Dec 2023. On MoM basis inflation increased by 1.2% MoM vs 0.9% last month.
Food inflation in Jan 2024 up 2.92% MoM. Food prices that have increased on MoM basis includes Chicken (+31% MoM), Tomatoes (+28% MoM), Onions (+28% MoM), Eggs (+17% MoM) and Fresh Vegetable (+8% MoM) among others.
However YoY uptick in food inflation was driven by an increase in the prices of Tomatoes (+154% YoY), Fresh Vegetables (+80% YoY), Condiments and Spices (+62% YoY), Sugar (+55% YoY), and Beans (+52% YoY) among others.
Housing, Water & Electricity which contributes 24% to the CPI, rose by 38.65% YoY and 2.52% MoM in Jan 2024. The significant MoM rise is attributed to an increase in the monthly fuel charges adjustment in electricity tariff and house rent index.
Transport index which comprises fuel prices fell by 2.36% MoM but increased by 26.15% YoY in Jan 2024.
“We anticipate CPI inflation in Feb 2024 to remain on the higher side in a range of 24-25% due to increase in local fuel (Petrol & Diesel) prices, rise in monthly electricity fuel charge adjustment, and expected increase in gas prices.
However, we expect major decline in inflation from March onwards, with full year average inflation for FY24 to remain at 25% compared to SBP’s inflation target of 23-25%,” Topline Securities CEO Mohammad Sohail said.
