Analysts Predict inflation at 28% in January 2023

Muhammad Haris

Inflation numbers for January to be released on Thursday where the expectation hovering around 27 percent to 28 percent little less from December’s 29.7 percent on cooling down in the petroleum product price decline, analysts said.

Inflation survey showed that inflation might be around 27.4 percent for the month of January while a small number of analysts believed that it would be around 28 percent.

In the coming months, inflation is expected to decline as high base effects come into play starting from February 2024. Nevertheless, the observance of the Ramzan month in March, known for potential increases in food inflation, rupee devaluation and another increase in gas prices from Feb’24, could pose upside risks to inflation numbers.

Tahir Abbas, head of research at Arif Habib Ltd., said that , that the inflation rate might touch 27.3 percent in January.

The average inflation for the first seven months of FY24 will be 28.6 percent, contrasting with the 25.4 percent rate recorded in the same period the previous year.

In Jan’24, the average core inflation is projected to reach 20.2 percent, showing a decline from last month’s figure of 21.3 percent.

Projections for Jan’24 indicate a month on month increase of 0.98%, contrasting with the average month on month increase of 1.95% observed over the first six months of FY24. This rise in monthly inflation is primarily attributed to increases in the food index (+1.7% MoM) and housing index (+1.9% MoM), while the transport index is expected to decrease MoM (-3.0%).

Tahir said that the increase in the food index is mainly due to higher prices of items such as onions, tomatoes, and poultry items like chicken and eggs. Additionally, the housing index will likely increase primarily because of a quarterly house rent adjustment while the transport index is expected to decline due to a decrease in petroleum product prices.