JS Global (a leading brokerage house), in a recent analysis, has predicted that the Consumer Price Index(CPI) Pakistan’s inflation in Pakistan in January will remain at a modest 27.9% on a year-on-year (YoY) basis.
This projection represents a slight decline from the 29.7 percent recorded in December 2023.
Pakistan’s Inflation Likely to Rise:
JS Global’s CPI preview for January 2024 indicates another month of rising food inflation, with rising house rents contributing to consistently high headline numbers.
The brokerage house expects a 1.8% month-on-month (MoM) growth in the food segment, leading to an overall 1.5% MoM rise in headline CPI, taking the annualized estimate to 27.9%.
Despite the slower pace compared to the previous two months, which averaged around 29.5 percent, JS Global sees this moderation as a high base.
The brokerage house has clarified that these estimates do not include the mid-month drop in petrol prices by Rs 8 per liter.
JS Global also highlighted expectations of price increases ranging from 13 percent to 29 percent MoM, for essential food items such as chicken, tomatoes, onions, and eggs, signaling a resumption of strong consumer momentum.
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However, on a YoY basis, last year’s high base is expected to limit growth to 23.6 percent compared to the recent average of 27 percent.
Looking ahead, JS Global forecasts CPI-based inflation at 24 percent in FY24 and 16 percent in CY24. The forecast includes factors such as rising gas prices, stable global oil prices, regular electricity tariff adjustments, and a gradual devaluation of the PKR.
In contrast, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) kept the key policy rate unchanged at 22 percent last month, in line with expectations.
The MPC expected headline inflation to decline significantly in the second half of FY24, citing supply slack, aggregate demand, moderation in international commodity prices, and a favorable base effect.