Pakistan’s Inflation Rate for November Likely to Fall Below 5%

Pakistan’s Consumer Price Index (CPI) for November 2024 is expected to clocked in at 4.5-5.0 percent YoY (+0.4 percent MoM), taking 5MFY25 average to 7.91 percent compared to 28.62 percent in 5MFY24.

During November 2024, food Inflation is expected to increase by 0.2 percent MoM. According to Topline Securities, this is mainly on the back of the rise in egg prices, Pulse Moong, Tomatoes, and potatoes prices in the range of 5-35 percent.

The housing, water, electricity, and gas segment is expected to witness approx. 0.11 percent MoM growth due to an increase in LPG prices by 7 percent MoM, while electricity prices are expected to decline on the back of negative fuel cost adjustment.

The transport segment is expected to witness an increase of 1.4 percent MoM on the back of an increase in petrol and diesel prices.

Real Rate

With inflation expectations of ~4.5-5.0 percent for November 2024, real rates will surge to 1,000-1,050bps, significantly higher than Pakistan’s historic average of 200-300bps.

Interest rate outlook

The report expects the interest rate to clock in at 11-12 percent by December 2025, suggesting positive real rates of 200-300bps based on FY26 inflation average of 8.8 percent. For FY25, the report expects inflation to clock in at 7-8 percent.

IMF in its recent report has revised its inflation forecast (average) for FY25 to 9.5 percent from earlier 12.7 percent reported earlier. While the central bank in its recent monetary policy communication has noted that, FY25 average inflation will fall below the earlier forecast range of 11.5 – 13.5 percent.

Key Risks

Any major deviation in commodity prices from current levels (i.e. oil US$75/barrel) may result in a change in inflation estimates.