By: Spectrum Securities Private Limited
Economy: Pakistan Bureau of Statistics is scheduled to announce the CPI figure on January 01, 2016 for the month of Dec’15. We expect CPI to settle at 3.80%YoY during the current month owing to pick up in House Rent Index and food prices. The yearly low pace inflation ended in Oct’15 due to diminishing of high base effect. In today’s report we present our forecast for Dec’15 headline inflation figure along with outlook.
CPI to clock in at 3.80%YoY in Dec’15: The Consumer Price Index (CPI) is expected to clock in at 3.80%YoY during Dec’15 as compared to 4.33%YoY in Dec’14. The expected increase in inflation is mainly attributed to surge in House Rent Index (HRI) by 5.42%YoY and food prices which are expected to grow by 3.20%YoY. The food index is expected to soar amid rise in prices of onion, pulse gram, besan, pulse mash and tomatoes by 119%YoY, 55.8%YoY, 50.9%YoY, 44%YoY and 27.1%YoY respectively. On the other side, stable Int’l oil and commodities prices is keeping the inflation in check. Hence, transport index is expected to decrease by 4.30%YoY due to declining int’l oil prices (~30%YoY decrease to USD38.1/bbl as per last day closing).
On monthly basis, CPI is likely to tick at 0.02%MoM during Dec’15 as compared to 0.59%MoM in Nov’15. Under food basket, prices of fresh fruit (~1.87% weight) and wheat flour (~4.17% weight) is expected to amplify by 0.05%MoM and 0.03%MoM respectively. Under non-food category, price of cigarette (~1.39% weight) is likely to increase by 0.08%MoM.