Karachi, September 04, 2023 (PPI-OT): Aug-23: Headline CPI Clocks in at +27.4%y/y Amid Higher Food and Utility Prices

Recent inflation data released by Pakistan Bureau of Statistics (PBS), shows for the month of Aug-23, headline CPI registered a +27.4%y (up by +1.7%m) growth compared to previous month, +28.3%y (+3.5%m).

As far as exchange rate concerned, recent C/a deficit and substantial debt repayments in FY24 are likely to keep PKR under pressure. Furthermore, import restrictions have been removed which has further increased pressure on PKR due to higher import payments.

Going ahead, we estimate national CPI to remain elevated during the ongoing month of Sep-23 on account of PKR depreciation, rise in petroleum and food prices.

We review Aug-23 National CPI numbers published by Pakistan Bureau of Statistics (PBS).

Aug-23: Inflation prints 27.4%y/y growth backed by higher food prices Recent inflation data released by Pakistan Bureau of Statistics (PBS), shows for the month of Aug-23, headline CPI registered a +27.4%y (up by +1.7%m) growth compared to previous month, +28.3%y (+3.5%m). Inflation was primarily led by food prices. Monthly increase in inflation was primarily led by food and transportation index on back of higher petroleum and liquid hydrocarbon prices. This takes 2mFY24 period average to +27.8%y compared to +26.1%y last year same period.

Rural inflation continues to out-run urban inflation

Urban inflation rose during the month up by +1.6%m/m to +25.0%y/y, whereas rural inflation increased by +1.9%m/m to +30.9%y/y.

SPI below 30% since July-2023

Other indices, Wholesale Price Index (WPI) registered a +24.3%y/y and +4.2%m/m growth respectively, and Sensitive Price Index (SPI) recorded a +27.9%y/y and 4.1%m/m basis during the month of Aug-23.

Outlook

Food index has been the major driver of overall headline inflation along with energy shocks and exchange rate deterioration. Food prices are likely to remain elevated in near term.

As far as exchange rate concerned, recent C/a deficit and substantial debt repayments in FY24 are likely to keep PKR under pressure. Furthermore, import restrictions have been removed which has further increased pressure on PKR due to higher import payments. Going ahead, we estimate national CPI to remain elevated during the ongoing month of Sep-23 on account of PKR depreciation, rise in petroleum and food prices.