Preview: November CPI seen rising 15.37%

Inflation to peak in coming months.


Reuters December 09, 2010

KARACHI: The Consumer Price Index (CPI) probably rose 15.37 per cent year-on-year in November due to rising food prices, virtually maintaining the same pace of inflation as in October, a Reuters poll shows.

The index rose 15.33 per cent in October. “CPI inflation is expected to rise once again for November, primarily owing to inflationary pressures from the food group,” said Farhan Bashir Khan, analyst at Invest Capital Investment Bank.

Food prices have been increasing following summer floods, which are estimated to have cost the economy nearly $10 billion. The central bank last month increased its key policy rate by 50 basis points to 14 per cent, its third consecutive rate rise in the past six months as it seeks to curb persistent inflation.

Inflation is expected to rise in coming months because of continued government borrowing from the State Bank and a delay in access to the sixth tranche of an $11.3 billion International Monetary Fund loan programme.

“Despite the expected spike in CPI inflation in November, this is likely to act as more of a springboard for a further increase especially during December when inflation may test the 18 per cent level,” said Khalid Iqbal Siddiqui, director at Invest and Finance Securities Limited.

The central bank forecasts inflation will average between 13.5 and 14.5 per cent in the 2010-11 fiscal year. The IMF expects average inflation of 14 per cent.

Published in The Express Tribune, December 9th, 2010.

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