Country’s CPI touches 5-year high to 9.41%

KARACHI: The Consumer Price Index (CPI) inflation for March 2019 was reported at 9.41 per cent, which is a 64 months or more than 5 years high. On a monthly basis, inflation was reported at a high 1.42 per cent compared to 0.64 per cent last month.

The Pakistan Bureau of Statics said, “CPI inflation General increased by 9.4 per cent on year-on-year basis in March, 2019 as compared to an increase of 8.2 per cent in the previous month and 3.2 per cent in March 2018.

On month-on-month basis, it increased by 1.4 per cent in March 2019 as compared to an increase of 0.6 per cent in the previous month and an increase of 0.3 per cent in corresponding month i.e. March 2018.

“The above inflation number for March is higher than market expectations where average inflation expectation was around 9 per cent for the outgoing month,” the analyst at topline brokerage house said. “Average inflation for nine months 2018-19 is now 6.8 per cent. For full year 2018-19, inflation to average 7.5 per cent compared to SBP’s expectation of 6.5-7.5 per cent,” the analyst predicts.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.5 per cent on (YoY) basis in March 2019 as compared to an increase of 8.8 per cent in the previous month and 5.8 cent in March 2018. On (MoM) basis, it increased by 0.5 per cent in March 2019 as compared to an increase of 0.2 per cent in previous month, and an increase of 0.7 per cent in corresponding month of last year i.e. March 2018.

The data said the core inflation, measured by 20 per cent weighted trimmed mean CPI (Core Trimmed) increased by 7.9 per cent on (YoY) basis in March 2019 as compared to 7.7 per cent in the previous month and by 4.1 per cent in March 2018.

On (MoM) basis, it increased by 0.4 per cent in March 2019 as compared to an increase of 0.2 per cent in the previous month and an increase of 0.2 per cent in corresponding month of last year i.e. March 2018.

The central bank had raised its key benchmark interest rate by 50 basis points to a six-year high of 10.75 basis points as lagged impact of rupee depreciation is likely to keep inflation upward, while twin deficits continue to warrant stabilisation measures.

“Sustainable growth and overall macroeconomic stability requires further policy measures as underlying inflationary pressures continue, the fiscal deficit is elevated, and despite an improvement the current account deficit is still high,” the State Bank of Pakistan (SBP) said in its March policy statement. “In this backdrop and after detailed deliberations, the MPC (monetary policy committee) decided to increase the policy rate by 50 bps (basis points) to 10.75 percent effective from 1st April 2019.”

The SBP shunned its soft monetary policy stance in January 2017 and since then it cumulatively raised the key benchmark interest rate by 500 basis points. The SBP lowered interest rate by 150 basis points to 10.5 percent in August 2012.

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