The local research house – WE Research anticipates the National CPI to clock in at 12.60%YoY for the month of Nov’19 as opposed to 11.04%YoY previous month and 5.7%YoY SPLY
• MoM basis CPI to escalate by 1.3% vs 1.81% last month, taking the 5MFY20 average inflation to 10.79% vs 6.10% same period last year
• SBP kept the policy rate and inflation outlook unchanged at 13.
25% and 11-12% respectively, which indicates monetary easing would be less aggressive than monetary tightening and we believe monetary easing
would start from Jan’20 or March’20
National CPI (NCPI) to arrive at 12.60%YoY/1.30%MoM Induced by Skyrocketing Food Prices
Taking cue from weekly SPI data, we anticipate the National CPI to clock in at 12.60%YoY as compared to 11.04%YoY previous month and 5.7%YoY SPLY, induced by skyrocketing food prices during the month under review. MoM basis NCPI to arrive at 1.3% vs 1.81% last month, taking 5MFY20 inflation to 10.79% YoY vs 6.10% SPLY.
Food inflation is expected to jump by 3.21%MoM due to steep rise in food prices. The major commodities which witnessed price hike include, tomatoes (up by +1.65xMoM), fresh vegetables (up by +12.33%MoM), onions (up by +5.62%), potatoes (up by +5.62%MoM), pulses (up by +8.23%MoM) and wheat (up by +2.06%MoM). While chicken (down by -5.96%MoM) and sugar (down by -1.78%) witnessed decline in their respective prices.
NCPI to average at 12.40% during Nov-Feb2020 In recent monetary policy, SBP kept the policy rate unchanged at 13.25%. Moreover, the average inflation outlook for FY20 has also been left unchanged at
11-12%, which indicates monetary easing would be less aggressive than monetary tightening. We believe inflation to remain elevated till Feb’20 amid higher food prices coupled with electricity and gas tariff upward adjustment, while NCPI during Nov-Feb’20 is expected to average at 12.40%. Hence, we anticipate that monetary easing would take place in Jan’20 or March’20.