Inflation in Pakistan for November 2024 is projected to fall to 4.7% year-on-year (YoY), a significant drop from October’s 7.2%, according to analysts at Arif Habib Limited. This represents the lowest inflation rate since April 2018, when it stood at 3.96%.
The month-on-month (MoM) inflation for November is expected to be 0.3%, contributing to an average inflation rate of 7.9% for the first five months of fiscal year 2025 (5MFY25). This is a sharp decrease from 28.6% during the same period last year.
The food inflation segment is expected to show a slight increase of 0.1% MoM, driven by price hikes in essential items. Notably, wheat flour prices are expected to rise by 0.2% MoM, while fish prices could soar by 7.5%, eggs by 11.8%, cooking oil by 2.1%, moong pulses by 7.7%, and tomatoes by 16.4%. On the other hand, some items, including chicken, bananas, and onions, are anticipated to see price reductions of 14.3%, 4.9%, and 3.6% MoM, respectively.
The housing index is forecasted to increase by 0.1% MoM, with notable price hikes in LPG and firewood, which are expected to rise by 8.3% and 2.7%, respectively. However, electricity prices are likely to see a 1.1% decline MoM, thanks to a negative fuel cost adjustment (FCA) of PKR 1.28/KWh for September 2024, which will be reflected in November 2024 electricity bills. This comes after a smaller FCA of PKR -0.86/KWh in the previous month.
Transportation costs are set to increase by 1.0% MoM, primarily due to higher prices for petrol and diesel. Despite this, the transport index is still expected to remain lower by 2.5% compared to last year.
Analysts anticipate that disinflation will continue in the coming months, largely due to a high base effect from last year’s inflation surge. Additionally, stable global commodity and energy prices, along with a steady Pakistani rupee, are expected to support this trend.
