Karachi, April 28, 2022 (PPI-OT): Pakistan Economy: Inflation to touch 13.0% in Apr’22

Inflation for the month of Apr’22 is likely to stand at 13.0%YoY – highest level since Jan’20 – compared to 12.7%YoY in Mar’22. On a monthly basis, inflation is expected to be recorded at 1.3%MoM, highest monthly accretion since Nov’21, potentially due to Ramadan effect.

Pakistan is set to restart IMF program which would provide much needed clarity on Pakistan’s macros particularly the external side which should bring stability to exchange rate – potentially shaving off inflationary pressures but at a lag.

We expect inflation in 2QCY22 to stand at 13.2%, whereas for CY22 we expect inflation at 12.9% with inflationary reading remaining in double digits for most of CY22, only to fall in single digit during 4QCY22. That said, the risks are skewed to upside from roll back of subsidy on fuel prices (not incorporated in our estimates).

End of political uncertainty and laser-focused steps by the new setup to address Pakistan’s external side is appreciated by the market where KSE-100 index has returned 4.6% in the past one month. The same is likely to continue at least in the near term where we advocate for concentrating positions in Banks and Techs.