JS Securities Limited - JS Research.

Karachi -- November 02, 2022 (PPI-OT)

Oct-2022 CPI at 26.6%, another push to the base

CPI for Oct-2022 once again surpassed street estimates (~23%), clocking in at 26.6% YoY, qualifying for among the top 10 CPI readings in the country's history.

With a MoM increase of 4.7%, the cumulative jump since start of FY23 goes to 10% in just four months, otherwise witnessed in a span of 9 - 10 months, key reasons being higher food inflation and electricity price adjustment.

Oct's CPI readings once again push base even higher, keeping estimated CPI above 22% till May-2023 in a scenario where MoM inflation increases by 50bp in each of the remaining months of FY23. We present a scenario analysis of FY23E CPI on various MoM growths.

Another month of among highest inflation readings in history

CPI for Oct-2022 once again surpassed street estimates (~23%), clocking in at 26.6% YoY, qualifying for among the top 10 CPI readings in the country's history. With a MoM increase of 4.7%, the cumulative jump since start of FY23 goes to 10% in just four months. For perspective, jump of a similar quantum is usually witnessed in a span of 9 - 10 months. Key reasons of the high inflation reading were (1) +35% YoY higher food inflation and (2) reversal of electricity price adjustment that was implemented in Sep-2022.

Food inflation clocked in at 35%/37% for Urban/Rural regions, respectively, where MoM increase was 5%/6% for the respective regions. This is in-line with the expected aftermath of floods, as was also witnessed post 2010 floods. The higher contributing items this month were Onions (+25% MoM), Tomatoes (+28% MoM), Wheat (+12% MoM) and Milk (+3% MoM).

The Index of electricity price increase recorded 89% YoY growth, contributing 400bp to the YoY CPI increase alone. To...