Pakistan’s CPI-based inflation predicted to decline to 20%

Consumer Price Index (CPI)-based inflation in Pakistan is forecasted to witness a further decline, potentially settling at approximately 20 per cent on a year-on-year (YoY) basis for March.

This projection marks a decrease from the 23.1 per cent recorded in February, as indicated by a report from Arif Habib Limited (AHL) released on Thursday.

The anticipated headline inflation rate for March 2024 is projected to stand at 20.2 per cent YoY, reflecting a notable downturn from the preceding month’s figure of 23.1 per cent YoY.

AHL’s report also highlights a substantial drop compared to the same period in the previous year, March 2023, when the YoY inflation rate was registered at 35.4 per cent.

Consequently, it is envisaged that the average CPI for the first nine months of the fiscal year 2023-24 will hover around a 27.2 per cent YoY level, consistent with the figures observed during the same period last year (SPLY), according to the brokerage house.

On a monthly basis, AHL’s projections for March 2024 suggest a modest increase of 1.3 per cent, contrasting with the average month-on-month (MoM) rise of 1.7 per cent recorded over the first eight months of the fiscal year.

This upturn in monthly inflation is primarily attributed to rises in key indices, notably the food index (+1.3 per cent MoM), transport index (+1.5 per cent MoM), and housing index (+2.9 per cent MoM), the report stated.

The brokerage house attributed the increase in the food index to the impending Ramadan season, foreseeing a month-on-month surge in prices of fresh fruits, potatoes, onions, and tomatoes.

Meanwhile, the housing index is expected to see an uptick primarily due to increases in gas tariffs and LPG prices.

Additionally, the transport index is anticipated to remain elevated owing to a month-on-month rise in petroleum product prices, according to AHL.

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