Rise in power tariff to lift inflation in October - Pakistan Today

Rise in power tariff to lift inflation in October

The Consumer Price Index (CPI) inflation for Oct-13 is expected to stand above the last two months levels.
“For the month of Oct-13 we expect CPI to clock in at 1.68%MoM (8.77% YoY),” said Abdul Azeem of InvestCap Research. Such increasing trend in CPI is expected mainly due to increase in power tariff 20%MoM, increase in POL prices by 4%MoM, 1.5% increase is expected house rent index and rising trend in Food and Non-alcoholic Beverages Segment, registering a increase of 0.34%MoM, said the analyst.
In food segment, he said, a sharp increase in potatoes, tomatoes and onion prices is expected to be yet another major factor behind the increase in CPI during the month. With the 1.68%MoM increase in CPI we expect YoY to clock in at 8.77% for Oct-13.
On the other hand, yearly moving average basis CPI is anticipated to remain in single digits staying at 8.24% for Jul-Oct-13.
Azeem said that Increase in power tariff was the main contributor to expected surge in CPI for the month of Oct-13. “With the weight of 4.4% in CPI we expect this item fuels up CPI by 0.88%MoM on the back of 20%MoM increase in power tariff,” he added.
Moreover, 1.5% expected increase in House Rent Index also jack up the inflation by 0.33% with the highest weight of 21.8%. Likewise, 4%MoM increase in POL product prices expected to add 0.12% in CPI for Oct-13. The government’s plan to increase gas tariff by eliminating subsidy from Jan-14 is expected to fuel up the inflation in 2HFY14 further.
In case the government allowed gas tariff hike by 35%, the expected impact on monthly CPI would be 0.55 percent.
“With the incorporation of these factors, we expect FY14 CPI to clock in at 10.60% on a 12-month moving average basis,” the analyst said.



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