Pakistan CPI increases 6.5% in November 2018

SBP projected average headline CPI inflation for 2018-19 in the forecast range of 6.5–7.5%, above the annual target of 6.0%

KARACHI: The Consumer Price Index (CPI) surged by 6.5 per cent in November 2018, which is below the expectations of the analysts. In the previous month, CPI increase of 6.8 per cent and 4.0 per cent in November 2017.

On month-on-month basis, it surged by 0.1 per cent in November 2018 as compared to an increase of 2.3 per cent in the previous month and increase of 0.4% in November 2017.

However, the State Bank of Pakistan (SBP) in its monetary policy statement had said that new challenges for the Pakistan’s economy would be a rising inflation, an elevated fiscal deficit and low foreign exchange reserves.

SBP projected average headline CPI inflation for 2018-19 in the forecast range of 6.5–7.5 percent, above the annual target of 6.0 percent.

Although the recent decline in international oil prices could potentially play a positive role in slowing down the current inflation trajectory the risks currently remain tilted towards the downside, the SBP monetary policy said.

The central bank has also increased the discount rate by 1.50 per cent for the next two months to 10 per cent, which will further curtail the rising inflation.

However, the analysts were of the view that the inflation may touch 7-8 per cent in the current fiscal year, as the policy discount rates have gone up which will constrain the purchasing power and on the other hand, low crude oil price will also support the economy if it continues in future.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 8.3 per cent on (YoY) basis in November 2018 as compared to an increase of 8.2 per cent in the previous month and 5.5 per cent in November 2017. On (MoM) basis, it increased by 0.4 per cent in November 2018 as compared to an increase of 1.1 per cent in previous month, and an increase of 0.3% in corresponding month of last year i.e. November 2017.

Core inflation, measured by 20 per cent weighted trimmed mean CPI (Core Trimmed) increased by 6.7 per cent on (YoY) basis in November 2018 as compared to 6.7 per cent in the previous month and by 4.2 per cent in November 2017. On (MoM) basis, it increased by 0.3 per cent in November 2018 as compared to an increase of 0.8 per cent in the previous month and an increase of 0.3 per cent in corresponding month of last year i.e. November 2017.

According to SBP data, Pakistan external debt and liabilities as of September 30 2018 reaches to $96.735 billion after rising $1.394 billion in first quarter of the current fiscal year.

The external debt and liabilities as of June 30, 2018 was at $95.342 billion compare to $85.642 billion stood on September 30, 2017, the SBP figures declared.

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