According to the SPI data published by PBS, CPI is expected to arrive at 12.55% YoY in Mar’22 due to 1.57% surge in food index, under food group Chicken prices recorded highest growth of 26% MoM, mainly due to higher demand as the consumption of other forms of meat declined due to the Lumpy Skin Disease. Additionally, vegetable ghee and cooking oil prices recorded growth of 9.44% and 6.68% MoM respectively on the back of higher palm oil prices, whereas fresh fruit prices increased 18% MoM due to pre-Ramadan effect. In clothing and footwear index long cloth prices have increased 2.67% due to the upcoming Eid festivities.

Among other groups transportation index is expected to provide some respite to the headline inflation as it declined 2.94% MoM due to Government’s efforts to contain inflation by freezing petroleum products prices. Hence, petrol and HSD prices declined 6.23% and 6.43% MoM respectively.

Average inflation for 9MFY22 is expected at 10.72% YoY versus 10.35% in 9MFY21.

Outlook

Going forward, we expect inflationary pressures to remain elevated due to i) higher food inflation in Ramadan ii) increased global commodity prices due to the ongoing Russia-Ukraine conflict iii) currency devaluation.

Courtesy – AHCML Research