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Karachi, January 30, 2014 (PPI-OT): Jan-14 CPI: Price index to show a subdued 8% YoY growth
Jan-14, price index to show a subdued 8% YoY growth
Arif Habib Limited expects Consumer Price Index (CPI) based inflation for the month of Jan-14 to clock in at 8.0% YoY, after registering a 9.2% YoY rise in Dec-13.
According to Arif Habib Limited, on MoM basis, this shows a 0.6%MoM rise in Jan-14 versus a 1.3%MoM decline in Dec-13 in the headline inflation. High base-effect of last year, stable food, and oil prices are expected to have been the factors for such subdued price growth during the month.
Food prices finally seem to subside
After witnessing a double-digit growth in SPI (a proxy for food inflation) – SPI inflation 8.7% on average in 1QFY14 versus 12.5% in 2QFY14 – Arif Habib Limited estimates food prices to show subdued growth during the month, as SPI inflation fell back to a single-digit growth in the preceding 3-weeks of Jan-14.
Unchanged non-food prices to further support downward trending inflation
Moreover, Arif Habib Limited estimates a static MoM growth in non-food prices, given relatively unchanged energy prices. In addition, Arif Habib Limited believes domestic energy prices could further slide downwards as international Arab Light prices came down 3%MoM to USD 108/bbl in Jan-14, from USD 111/bbl on average in Dec-13.
No big surprises in House Rent price revision
For Jan-14 CPI, the quarterly adjustment in the House Rent index is also expected. House Rent index has shown a steady growth of 8%YoY in the last quarter. However, Arif Habib Limited does not think adjustment in House Rent index would be a major source of any upside risk for now.
Outlook
With the expected figures in Jan-14, 7MFY14 period average is expected at 8.8%, slightly up from 8.3% same period last year. Going forward, Arif Habib Limited estimates inflation to clock in at 10.0%-10.5% for FY14, higher than 7.4%YoY registered in FY13, while Arif Habib Limited expects not more than a 50bps increase in policy rate for 2014.