CPI Inflation ends FY20 with 8.6% YoY in Jun’20

Pakistan Bureau of Statistics released the CPI Inflation data for Jun’20. CPI Inflation clocks in at 8.6% Y/Y during Jun’20 compared with a reading of 8.2% recorded during May’20 and 8.0% during Jun’19. On a cumulative basis, average inflation is 11.0% during FY20 compared with 6.8% recorded during FY19.

Food Inflation offset the drop in petroleum prices.

Food inflation during Jun’20 escalated by 2.10% MoM due to a considerable hike in prices of key items including Eggs (+21.71%), Tomatoes (+13.09%), and Wheat Flour (+12.00%) Due to its higher weight, food inflation was able to offset the reduction in domestic fuel prices, which reduced the transport index by ~1.06% MoM. Ultimately, monthly inflation grew by 0.82% MoM during Jun’20.

Real interest rates temporarily hovering in the negative region

After the recent cut in interest rate by 100bps to 7.0%, real interest rates are now expected to hover in the negative region. For Jun’20, real interest rate is negative 1.60%. In addition, government has revised the petroleum prices up for this month with an estimated MoM impact of 0.66% towards CPI. The GoP, however, has allowed the import on wheat, a move expected to normalize the commodity’s prices onwards. Consequently, anticipated decline in food inflation will likely offset the impact of higher domestic petroleum prices.

Share on facebook
Share on twitter
Share on linkedin

You may also like

Leave a comment

Your email address will not be published. Required fields are marked *

Categories

Recent Blogs

Archive

Follow Us