JS Securities Limited - JS Research.

Karachi -- September 19, 2022 (PPI-OT)

Sep-22: CPI expected at 26% over higher food inflationWe expect another month of 25%+ YoY CPI reading, where we expect CPI for Sep-2022 to clock in at 26.4%. While this would be lower than Aug-2022's readings of 27.3%, we expect inflation trend to remain on the higher side owing to higher food inflation and ongoing second-round impacts.Going forward, the continued weakness in PKR, WPI reaching 41.2% and aftermath of floods are likely to maintain pressure on national CPI.

To recall, in the last devastating floods witnessed during 2010, food inflation soared from 12.8% in Jul-2010 to 21.2% in two months, led by 2 +5% MoM jumps.

Sep-2022: Food inflation to worsen the burden

We expect another month of 25%+ YoY CPI reading, where we expect CPI for Sep- 2022 to clock in at 26.4%. While this would be lower than Aug-2022's readings of 27.3%, we expect inflation trend to remain on the higher side owing to higher food inflation and ongoing second-round impacts. On a MoM basis, CPI is expected to witness an uptick of 1.4%. Food inflation is expected to continue to remain on an upward trajectory, with 275bp MoM increase in Sep-2022, led by further sharp rise in tomato prices in the monsoon season.

For perspective, tomato prices have jumped by 100% in two months, out of which +40% has been recorded in Sep-2022. Egg prices have jumped 24% since Jul-2022, from which 15%...

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