CPI Inflation at 7.93% in December – Alfalah Securities Limited

Karachi, January 02, 2013 (PPI-OT): Consumer Price Index (CPI) inflation YoY is reported to be at 7.93% in December 2012 as against 6.9% in November 2012 and 9.7% in December 2011.

According to Alfalah Securities Limited, the inflation has inched higher as compared to the preceding month as a result of increased money supply amid low interest rates and steep devaluation of Pak Rupee against Dollar in the month of December. Overall, CPI inflation increased by 8.32% during July-December FY13 as compared to the same period of last year, as reported by Pakistan Bureau of Statistics (PBS). On monthly basis, CPI increased by 0.2% MoM in December 2012 as compared to an decrease of 0.4% in the previous month and an decrease of 0.7% in December 2011. Core inflation (non-food and non-energy inflation) rose to 9.8% as compared to 9.7%YoY in November 2012 and 10.1% in December 2011.

The December CPI inflation, although higher than the previous month, it is still below the discount rate of 9.5% while keeping the real rates positive which may let the Central Bank maintain the discount rate at current levels. Therefore, Alfalah Securities Limited expects the discount rate may remain unchanged in the upcoming monetary policy announcement.