Pakistan’s Consumer Price Index (CPI) based inflation is likely to slow down to 27 percent year-over-year (YoY) for July 2023 against 29.4 percent in June 2023, according to a report by Ismail Iqbal Securities.
The report said that the slowdown is purely due to a high base effect. On a month-over-month (MoM) basis, inflation is estimated at 2.4 percent vs -0.3 percent in June 2023.
The surge on MoM basis is mainly due to higher food inflation (mainly wheat, sugar, and vegetables), and an increase in the housing segment (mainly quarterly house rent revision, and electricity base tariff increase by up to 27 percent for residential consumers), the report said.
The report noted that there are still a few concerns on the inflation front, especially with the rising global petroleum prices, and pending gas price hike. The expected decline in wheat prices has also not materialized. However, it said that the good bit is the expected PKR stability, which would help in avoiding major shocks.
It is pertinent to mention here that in its ‘Monthly Economic Update & Outlook’ for July, issued last week, the Ministry of Finance said that inflation in July 2023 is expected to ease out compared to June 2023. The ministry said that inflation for July is expected to remain in the range of 25-27 percent.
