News Report
Pakistan CPI Inflation rate in January 2022 rose by 13.0% YoY vs. 12.3% in Dec 2021 led by low base effect, and higher food inflation.
On an MoM basis, inflation clocked in at 0.4%. In 7MFY22, inflation averaged 10.3% vs. 8.2% in the same period last year.
The core inflation rate in Pakistan increased by 8.2% YoY in Jan 2022 as compared to 8.3% last month. Core inflation clocked in at 0.8% on an MoM basis.
The food inflation rate in Jan 2022 rose by 12.8% in Pakistan as compared to an increase of 10.3% in Dec 2021.
The higher food inflation rate was driven by an uptick in prices of Cooking Oil (up 54% YoY), Pulse Masoor (up 41% YoY), Meat (up 22% YoY), and Wheat (up 15.8% YoY).
Food inflation was the highest recorded since April 2021 when it rose to 15.9%. We attribute this to higher transportation costs and higher global food & commodity prices.
However, on an MoM basis, pressure on food prices has started to subside as in Jan 2022 food inflation was down 0.5% after a decline of 3.4% MoM in Dec 2021.
The housing, Water, Electricity, & Fuel index, which contributes around 24% to the CPI, rose by 15.5% in Jan 2022 vs. an increase of 16.6% in Dec 2021.
On an MoM basis, it increased by 1% driven by a revision in the quarterly house rent index.
Higher petrol and Diesel Prices led to an uptick in the transport index which rose by 23% YoY and 1% MoM in Jan 2022.
Consequently, real interest rates have now increased to -3.3% in Jan 2022 vs. -2.6% in Dec 2021. In 7MFY22, real interest rates have now averaged -2.2%.
With rising oil prices and a possible increase in power tariffs, we anticipate monthly CPI inflation to remain in the range of 11-13% during the remainder of FY22, Topline Research said.
We also expect inflation to average 11% in FY22 as compared to 8.9% in FY21. This will be at the higher end of the inflation range SBP has forecasted for FY22 of 9-11% for FY22, Topline Research said in a note.
