Inflation for May’22 arrived at 13.8% YoY versus 13.4% YoY in Apr’22 and 10.9% YoY during same period last year.

Average inflation for 11MFY22 clocked in at 11.25% YoY versus 8.83% YoY during 11MFY21.

Reduced electricity tariffs contain inflation for May’22!

As per the latest data published by PBS, Consumer Price Index (CPI) for May’22 rose to 13.8% YoY. Inflation came in lower than our and industry expectations due to decline in prices of fresh vegetables (-15.26%) such as tomatoes (-19.1%) along with reduced prices of fruits (-12.94%) due to normalization in prices post Ramadan.

Housing index declined -2.3% MoM due to 10.7% reduction in electricity tariffs which we believe is expected to reverse as Government is making efforts to reduce the subsidies to conform to IMF’s conditions.

Transportation index surged 2.7% due to higher motor fuel and transport service charges. The index is expected to surge in June as the petroleum products prices have been increased to Rs.180/L and are expected to raise further.

We expect inflation to remain elevated in the coming months due to direct impact of higher petrol and HSD prices as well as the second round effect will cause higher inflation in other indices as well.

Courtesy – AHCML Research