<\/p>\n\n\n\n
In July 2024, Pakistan’s economy presented a mixed bag of economic indicators. The Consumer Price Index (CPI) fell to an impressive 33-month low of 11.1%<\/strong>, primarily due to the high base effect from the previous year’s soaring inflation.\u00a0<\/p>\n\n\n\n This decline in CPI, despite a sequential uptick in inflation, reflects a complex interplay of factors affecting the economy.<\/p>\n\n\n\n The July CPI drop was influenced by a significant moderation in food inflation, which registered a mere 1.6% YoY<\/strong> growth, the lowest in nearly five and a half years.\u00a0<\/p>\n\n\n\n This reduction starkly contrasts with the hyperinflationary period observed in FY23, where food inflation soared with a monthly average uptick of 312 basis points (bps) and a YoY increase of 38%. <\/p>\n\n\n\n However, July 2024 still saw a monthly rise in food prices by 4.7%<\/strong>, contributing 1.6% to the overall 2.1% monthly increase in the baseline CPI.<\/p>\n\n\n\n Looking ahead, inflationary pressures are expected to resurface in FY25, driven by several factors. <\/p>\n\n\n\n A monthly inflation pace of 110 bps is anticipated, with notable spikes between August and October 2024, attributed to potential increases in petroleum development levy and utility charges, including a projected 15% increase in power tariffs<\/strong> and a 20% hike in gas prices<\/strong>.\u00a0<\/p>\n\n\n\n Additionally, milk prices, both branded and unbranded, are expected to rise, which could significantly impact the CPI given milk’s weight in the basket.<\/p>\n\n\n\n The forward-looking CPI for FY25 is projected to average around 10%, with temporary spikes potentially pushing it to 14% in mid-2025 before normalizing below 11% by October 2025. <\/p>\n\n\n\n Despite these inflationary expectations, real interest rates are projected to remain robustly positive. <\/p>\n\n\n\n At the current policy rate of 19.5%, real interest rates are estimated to be significantly positive, ranging from 5.3% at the peak CPI reading to 11.7% <\/strong>at the lowest.<\/p>\n\n\n\n The Karachi Stock Exchange (KSE100) Index closed at 77,740.31 points, reflecting a decrease of 146.68 points. This dip is indicative of the cautious sentiment prevailing in the market amidst the complex economic backdrop. <\/p>\n\n\n\n Investors are likely grappling with the uncertainty posed by the anticipated inflationary pressures and the overall economic trajectory.<\/p>\n\n\n\n While Pakistan’s current economic indicators suggest a short-term relief in inflationary pressures, the outlook remains cautious. <\/p>\n\n\n\n The projected rise in utility charges, potential adjustments in policy rates, and volatile food prices could reintroduce inflationary challenges. <\/p>\n\n\n\n Policymakers and market participants will need to navigate these dynamics carefully to maintain economic stability and foster growth.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" In July 2024, Pakistan’s economy presented a mixed bag of economic indicators. The Consumer Price Index (CPI) fell to an impressive 33-month low of 11.1%, primarily due to the high base effect from the previous year’s soaring inflation. <\/p>\n","protected":false},"author":4890,"featured_media":3536,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[153,48],"tags":[142],"class_list":["post-5942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-news","tag-cpi"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/CPI-NEWS-1140x445.jpg",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/CPI-NEWS-463x348.jpg",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/CPI-NEWS-300x188.jpg",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/CPI-NEWS.jpg",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/5942","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/4890"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=5942"}],"version-history":[{"count":0,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/5942\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/3536"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=5942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=5942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=5942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}CPI Dynamics and Food Inflation<\/h2>\n\n\n\n
Inflation Forecast and Real Interest Rates<\/h2>\n\n\n\n
Market Performance and Economic Outlook<\/h2>\n\n\n\n