The inflation rate for May 2024 is anticipated to be 12.80% year-over-year (YoY), a decrease from the 17.34% YoY observed in the previous month. On a month-over-month (MoM) basis, inflation is expected to decline by 2.37%. This reduction is largely due to a decrease in the prices of essential commodities during the measurement period.
These reductions are influenced by improved supply conditions and a reluctance of Punjab authorities to procure wheat at the minimum support price (MSP).
Despite the sharper-than-expected drop in inflation, future CPI readings are projected to hover near current levels until December 2024, with an estimated average of 13.0% for the second half of the calendar year 2024 (2HCY24).
With CPI averages expected to stay below 15% YoY on a twelve-month forward basis, policy decisions will likely prioritize securing external and fiscal accounts before any monetary easing. Although the central bank is anticipated to take steps to ease stagflation risks, the monetary policy rate is expected to stabilize at 18% by the end of CY24.
The inflation for May 2024 shows a significant decline compared to the previous month, driven by decreases in essential food commodities and utility adjustments. However, future inflation trends will be influenced by budgetary measures and a low base effect. The central bank is expected to play a crucial role in managing inflation and monetary policy in the coming months.
| Sector | Weights | May-24 | Apr-24 | MoM | May-23 | YoY |
|---|---|---|---|---|---|---|
| General | 100.0% | 257.1 | 263.3 | -2.4% | 228.0 | 12.8% |
| Food | 34.6% | 269.8 | 286.4 | -5.8% | 264.5 | 2.0% |
| Alcoholic | 1.0% | 367.8 | 366.1 | 0.5% | 356.4 | 3.2% |
| Clothing | 8.6% | 242.8 | 238.4 | 1.9% | 203.0 | 19.6% |
| Housing | 23.6% | 235.7 | 239.8 | -1.7% | 177.9 | 32.5% |
| Furnishing | 4.1% | 266.7 | 266.4 | 0.1% | 235.1 | 13.4% |
| Health | 2.8% | 237.3 | 237.3 | 0.0% | 201.9 | 17.5% |
| Transport | 5.9% | 318.2 | 320.3 | -0.7% | 285.4 | 11.5% |
| Communication | 2.2% | 134.8 | 134.8 | 0.0% | 118.3 | 14.0% |
| Recreation | 1.6% | 258.8 | 258.8 | 0.0% | 242.9 | 6.5% |
| Education | 3.8% | 196.2 | 196.2 | 0.0% | 171.6 | 14.3% |
| Restaurants | 6.9% | 272.2 | 269.4 | 1.1% | 235.1 | 15.8% |
| Miscellaneous | 4.9% | 282.2 | 282.2 | 0.0% | 246.6 | 14.4% |
Disclaimer:
The information in this article is based on research by AKD Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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