Pakistan Bureau of Statistics (PBS) is scheduled to announce the CPI figure for the month of Aug-20 on Tuesday, September 01. 2020). We expect the CPI to settle at 8.35% YoY, lower than 9.30% in Jul-20. While on a monthly basis we expect CPI to elevate by 0.50%MoM mainly due to a rise in non-food group prices.

Transport Index (weight 5.9%) can be a major expected factor to stimulate inflation during the month as the rise in Motor Fuel and Transport service was recorded at 4%MoM and 5%MoM respectively. Followed by health and clothing Index is expected to grow by 3.3% and 1.14% respectively, However, the food index can record a decline by 0.18%MoM as the prices of chicken, tomatoes and fresh fruits to decline significantly by 30%MoM, 20%MoM and 9.6%MoM respectively.

On a yearly basis, the Consumer Price Index (CPI) is expected to surge by 8.35%YoY during Aug’20 relative to 10.54%YoY in Aug’19. The expected rise in inflation is mainly attributable to the surge in Food & Non-alcoholic Health, Clothing Footwear, and Housing, Water, Elec., Gas groups.

Outlook

Going forward, we expect average inflation would remain on the higher side as food supply constraint along with circular debt adjustment in electricity prices, The rupee devaluation also another threat to the increase in utility price.