CPI Disinflation on Track Despite Significant Gas Price Surge

Karachi, In a recent economic update, it was reported that November 2023 saw the Consumer Price Index (CPI) reach 29.2%, marking a substantial monthly increase of 2.7%. This rise, primarily driven by a dramatic 280% month-over-month surge in gas prices, represents a notable shift following four months of relative stability in CPI trends.

According to JS Global, the overall impact on the CPI was somewhat mitigated by declines and minimal increases in other major categories. Transportation costs witnessed a 2.6% decrease, attributed to recent reductions in POL product prices. Additionally, electricity charges fell by 11% month-over-month, while food prices saw a modest increase of 1%. Excluding the gas price hike, the month-over-month CPI increase was confined to just 60 basis points, indicating some respite from other significant cost drivers.

Looking ahead to December 2023, CPI figures are expected to remain above 29%. This projection hinges on the unlikely scenario of the month-over-month inflation reading falling below 32 basis points. However, despite the current fluctuations, the long-term outlook for disinflation seems to remain on course. The 12-month forward CPI average currently stands at 18%, suggesting a gradual return to lower inflation levels. The report does caution, however, that a sharper than anticipated depreciation of the Rupee against the US dollar poses a significant risk to these inflation projections.

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