KARACHI: Consumer Price Index (CPI) inflation rambled by 4.0 per cent on the year-on-year (YoY) basis in September 2017 as compared to an increase of 3.4 per cent in the previous month and 3.9 per cent in September 2016.
The inflation surged according to the expectations of the market analysts, who predicted CPI inflation in between 3.6 per cent to 3.9 per cent in September this year owing to the increase in food prices and continuous increase in petroleum prices for last two months.
The CPI, on month-on-month (MoM) basis, increased by 0.8 per cent in September 2017 as compared to an increase of 0.2 per cent in the previous month and increase of 0.2 per cent in September 2016. “With comfortable wheat and sugar stocks, no major disruption is expected from supply side in the coming months of 2017-18,” the SBP said.
The State Bank of Pakistan (SBP) said that this is also visible from IBA-SBP’s consumer confidence survey of September 2017, which shows a modest rise in expected inflation during the next six months. Thus, with these demand and supply-side dynamics “the average CPI inflation is expected to remain well below the fiscal year 2017-18 target of 6.0 percent,” SBP added in its last monetary policy statement.
“Food inflation increased by 1.40 per cent MoM on the back of a large increase in prices of fresh vegetables particularly onion and tomato due to high transportation cost from Balochistan and seasonal changes in Punjab region,” an analyst said.
Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 5.4 per cent on YoY basis in September 2017 as compared to an increase of 5.5 per cent in the previous month and 4.8 per cent in September 2016, whereas core inflation measured by 20 per cent weighted trimmed mean CPI (core trimmed) increased by 4.1 per cent on YoY basis in September 2017 as compared to 4.2 per cent in the previous month and by 3.7 per cent in September 2016.
SPI inflation increased on the YoY basis by 1.9 per cent and WPI inflation increased on the YoY basis by 1.6 per cent in September 2017.
However, the impact is diluted amid a seasonal decline in prices of chicken and fresh fruits.
Food inflation is expected to maintain its upward trend in October and November, some respite can be seen as supply chain glitches and consequent artificial shortage due to monsoon rain abates. However, the effects of the harvest of minor crops on food inflation should be seen in November to February, an analyst claimed.
Further, the analyst expects oil prices to recede upward pressure as production normalizes at refineries that braced impact of US hurricanes. Outlook is also mired as US crude production climbs to 9.5 million bpd, approaching all-time high of 9.6 million bpd.