Jump to content

Welcome to Tezi Mandee - Community Of Pakistani Investors & Traders
Register now to gain access to all of our features. Once registered and logged in, you will be able to create topics, post replies to existing threads, give reputation to your fellow members, get your own private messenger, post status updates, manage your profile and so much more. If you already have an account, login here - otherwise create an account for free today!

Welcome to Tezi Mandee - Community Of Pakistani Investors & Traders

Welcome to Tezi Mandee - Community Of Pakistani Investors & Traders, like most online communities you must register to view or post in our community, but don't worry this is a simple free process that requires minimal information for you to sign up. Be a part of Tezi Mandee - Community Of Pakistani Investors & Traders by signing in or creating an account.
  • Start new topics and reply to others
  • Get latest news on Karachi Stock Market
  • Subscribe to topics and forums to get automatic updates
  • Registered member get added in mailing list for mailing updates
  • Get your own profile and make new friends
  • Customize your experience here
  • Be the first to know the KSE latest announcements shared by our members
  • Registered members get access to Protected Forums and topics
  • Registration is free Create Account
  • If you are already a member just Sign in
To Create Account ( Click Here )
To Sign In ( Click Here )
 

Consumer Price Index ( CPI )

Consumer Price Index CPI SBP

250 replies to this topic

#1
Amin Khan

    CAPTAIN

  • Member
  • 9,048 posts
  • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    FY11 inflation clocks in at 13.9% YoY whereas FY12 outlook seems lower

    CPI based inflation for FY12 seen at 12.6% YoY
    The Federal Bureau of Statistics (FBS) has released inflation figures for the month of Jun’11. Consumer Price Index (CPI) based inflation or the month Jun’11 registered a 13.13% YoY rise compared to a rise of 13.23% YoY recorded in May’11. This brings the FY11 average inflation at 13.93% YoY against 11.71% YoY witnessed in FY10, which is below than SBP revised estimates of 14.0%-14.5%. Rising food and energy prices along with GoP reliance on government borrowings were the major reasons for high inflation in FY11. However, in FY12 we expect the average annual CPI inflation to fall back to 12.6% YoY. Factors responsible in FY11 for inflation will continue to portend in FY12. In the back drop of this, we believe low inflation outlook may provide to SBP to for monetary easing from the 2HFY11.

    Food and energy price eases off…
    CPI inflation for the month of Jun’11 increased to 13.13% YoY from 13.23% YoY in the previous month. Food inflation overall witnessed an increase of 0.53% MoM notably in its subcomponent the non-perishable food items registered a 1.08% MoM rise. However falling international food prices (1.02% MoM drop in FAO index for May’11) has welcome some respite in perishable food items (registered a 9.51% YoY rise against a YoY peak 53.87% witnessed in Nov’11) from the steady double digit increases seen over the last 11 months in FY11. This brings the average annual food inflation at 17.69% YoY.
    Going forward we however believe this rise in food prices to ease off owing to normalizing world food prices, better than expected crop projection in Pakistan in FY12 and 12- month moving average of SPI suggesting a change of trend; we believe food prices to fall back in medium-term while in short-term we may see some price rigidity.

    …whereas non-food no-energy price picks up pace
    Non-food non-energy (NFNE) core inflation has consecutively registered double digit YoY growth in May’11 and Jun’11 of 10.2% and 10.4% respectively. This is mainly due to growth in M2 (+17.1% YoY) attributed to high government borrowings, which to date stands at PKR 685bn (25% YoY rise in stock). Second to that is the rising trend witnessed in House Rent. HRI, which constitutes ~ 23% weight in the total CPI basket has picked up pace in the 4QFY11 registering a 1% MoM rise on average against a 0.5% rise witnessed on average in 9MFY11.

    FY12 inflationary pressure eminent on back of higher govt. borrowing
    Having the FY11 inflation performance review, we expect annual average CPI inflation for the FY12 to register 12.6% YoY. This we base on the aforementioned factors such falling international food prices outlook and oil prices (Arab light currently at USD108/bbl after touching a peak of 122/bbl in Apr’11). Furthermore, the high base effect which seems visible is to start from Sept’11. However ongoing risks to inflation remain eminent owing to high government borrowings, which may gather pace depending on bleak outlook over external funds. Therefore keeping the above in view we expect the SBP maintain the policy rate at 14% in 1HFY11 while we may see monetary easing starting from 2HFY11 given the inflationary outlook.
    (AH)

    =============================

    CPI down to 13.1% YoY in Jun-11

    CPI inflation eased by 11bps to 13.1% YoY in Jun-11, closing the year at an average inflation of 13.9% vs. 11.7% last year.

    Our view on FY12E inflation (12% YoY) remains intact; where we expect inflation to exceed 14% in Jul-Aug and later moderate to below 12% as high base effect of last year's floods kicks in.

    The ease off in inflation in 2QFY12 keeps us optimistic about a potential easing in monetary policy in 2HFY12. However government's borrowing patterns could be vital, as it continues to dominate private sector borrowing.

    For 1QFY12 the govt has targeted PRs750bn and PRs50bn from T-bill and PIB auctions against maturities worth PRs742bn (PRs58bn net borrowing). Looking ahead, govt demand for domestic borrowing vis-à-vis realization of external inflows will remain the key risk to potential monetary policy easing.
    (KASB)

    =============================

    CPI grows by 13.13% YoY in FY11

    Consumer prices surged by 13.92% in FY11 compared to the previous year, according to the recent release of data by FBS. For the month of June, CPI grew by 13.13% YoY and 0.55% over May, 2011.

    This can be mostly attributed to subdued growth in prices of the heavyweight group in the CPI basket: Food and Beverages. Furthermore, the other significant group, transport and communication, experienced a relenting in prices.

    FY11 ends with lower inflation
    The first half of FY11 was marred with rampant inflation, due mostly to food supply disruption in the wake of floods. As shown in the graph below, the situation gradually eased as perishable food commodity’s prices returned to normal.

    Inflation reduced to lower levels also due to timely hikes in monetary policy rate by a total 150bps.
    Two other significant propellers of inflation during most of the year were hikes in power tariff and transport charges as a result of subsidy elimination and high international crude oil prices, respectively.
    (Taurus)
    Click Here For: "Daily Reports From Different Brokerage Houses"


    #2
    Amin Khan

      CAPTAIN

    • Member
    • 9,048 posts
    • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    SBP asks govt to contain borrowing to check inflation
    Monday, 04 July 2011 18:05



    KARACHI: The State Bank of Pakistan (SBP) has said that fiscal discipline and restrictions on Government borrowing from SBP are necessary to contain inflationary expectations, which have become ingrained in recent months, according to State Bank’s Third Quarterly Report on the State of Pakistan’s Economy for FY11 released today.

    ‘In overall terms, although the post-flood hike in CPI inflation has largely dissipated, inflation is stubborn, in excess of 13 percent.Possible reasons could include: (a) the lagged impact of government borrowings from SBP during Jul-Sep 2010; (cool.gif frequent upward adjustments in utility and POL prices; © increase in commodity prices; and (d) the rising trend in the house rent index (HRI),’ the Report observed.

    The Report said the Government is facing difficulties in containing the fiscal deficit. SBP Report stressed that implementation of fiscal reforms still poses political challenges. ‘For instance, structural problems that require difficult policy decisions for fiscal consolidation (e.g. expanding the base of GST through the withdrawal of exemptions, tax on agri-income, and restructuring and privatization of PSEs) are pending resolution and awaiting multi-partisan consensus,’ the Report added.

    As far as financing is concerned, the Report observed that the Government has had little option but to rely on domestic sources to finance a growing fiscal gap.More specifically, while borrowing from SBP was largely contained at end-September 2010 levels, the abrupt change from April 2011 onwards (the Government borrowed over Rs 350 billion from the central bank during 31st March – 3rd May 2011) were largely meant to internalize the growing quasi-fiscal expense (e.g. the circular debt in energy) into the budget.In other words, this borrowing is actually financing the carry-over of quasi-fiscal deficits from previous years, according to the Report.

    The SBP Report further said that the impact of the widening fiscal deficit is clearly visible in the sharply rising domestic debt.Outstanding Government domestic debt reached Rs 5,594 billion (31.8 percent of estimated GDP) which is more than double the stock at end-June 2007, the Report said and added that this sharp growth in debt stock is fueling concerns about macro stability and monetary management.

    In addition, the maturity profile of domestic debt reveals that the government has to rollover the entire stock of Rs 2,854 billion of short term debt at least once a year.Any surge in credit demand from other sectors of the economy could elevate rollover risk, and could also expose the government to interest rate risk,’ the Report added.

    In terms of fiscal management, going forward, desirable revenue generating measures (e.g. broadening of the tax base, improving documentation of the economic system, gradual elimination of un-targeted subsidies and curtailment of quasi-fiscal operations) are necessary to contain the fiscal deficit to below 4.5 percent of GDP in FY12, the Report said, adding that these efforts need to be accompanied with better debt management to increase the tenor of domestic debt and lower risks associated with debt re-pricing and rollover.

    While emphasizing on significant improvement in the external sector, the Report said that the rising prices of value added textiles and strong growth in remittances are main factors that pushed the current account into a surplus of US$ 748 million (Jul-Apr 2011) from a deficit of US$ 3.5 billion in the corresponding period of the preceding year. Textile exports managed to post strong growth despite efforts by competitor countries to hinder concessionary access of Pakistani products in developed markets, the Report said and added that the steady growth in remittances is a welcome development – for the first time in Pakistan’s history, monthly remittances crossed the US$1 billion mark for two consecutive months (March and April 2011).

    ‘This comfort from the external account together with broadly contained government borrowings from the central bank, allowed SBP to hold the policy rate at 14 percent in the last three policy announcements (January, March and May 2011).These decisions reveal a shift when compared to the cumulative increase of 150 bps implemented during H1-FY11.For effective monetary management, maintaining government borrowings from SBP at end-September 2010 levels will be critical,’ the Report emphasized.

    ‘Provisional estimates put forward by the National Income Accounts Committee show GDP growth at 2.4 percent for FY11, lower than the growth of 3.8 percent in the previous year. In the context of the prevailing security concerns, the exogenous shock from rising oil prices and the impact of the unprecedented floods, this decline is broadly in line with SBP’s expectations,’ the Report added.

    The Report said that on a positive note, the post-flood recovery in wheat, sugarcane and minor crops helped agricultural growth surpass previous year’s level.However, rural incomes may not rise proportionately due to lower market prices of wheat and rising input costs (e.g. diesel and fertilizer), the Report added.

    In the manufacturing sector, demand for products, particularly textiles, autos, fertilizer, cement, and POL remained strong, the Report said, adding that nevertheless, despite this strong demand, supply constraints – particularly the shortfall in energy – created production bottlenecks, which led to a significant slowdown in industrial growth.

    ‘In our view, the growth outlook will be shaped by policy responses to several key domestic challenges: (1) energy shortages, which are restricting growth; (2) the high fiscal deficit whose financing has become difficult – partly owing to the backlog arising from the non-recognition of power sector subsidies of earlier years as reflected in the circular debt; (3) build-up of domestic debt, raising concerns for macro stability; and (4) inflationary pressures which are not receding readily,’ according to the Report.

    SBP Report said that going forward the policy challenge is to distribute available gas supplies efficiently amongst competing users. ‘Keeping this in view, the ECC recently decided to divert gas supply to the fertilizer sector, recognizing the importance of stable agricultural input prices and saving foreign exchange on imported fertilizer,’ the Report added.

    ‘In the context of a sustainable energy policy, we believe that feasible alternatives to furnace oil (for power generation) need to be developed urgently. Furthermore, the potential role of imported gas is unquestionable in the medium-term, and policy emphasis must be directed towards developing the necessary infrastructure to use imported gas,’ the Report said, adding that more importantly, a better policy option going forward is to rationalize tariffs for different users of this scarce resource and improve the gas pricing structure to incentivize further exploration and extraction. –PR
    Click Here For: "Daily Reports From Different Brokerage Houses"

    #3
    Amin Khan

      CAPTAIN

    • Member
    • 9,048 posts
    • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    Inflation for Jun11 tapers down to 13.13%

    Inflation in Jun11 eased to 13.13% YoY from 13.23% in May11 primarily on the back of 1) Cut in fuel prices by 1.9-5.6% translating into Fuel & Lighting inflation to lower by 0.50% MoM; and 2) A 3.32% MoM decrease in perishable food prices.
    On a sequential basis, inflation is up by 0.55% with the heavy weights Food & Beverage and House Rent accreting by 0.53% and 0.97% respectively.

    Food, fuel drives inflation in FY11
    Average inflation during FY11 stood at 13.93% compared to 11.71% in FY10. Higher inflation is primarily attributed to an increase in food and energy prices. Food and beverage contributed 52% to inflation during FY11 while energy (fuel & lighting and transport & communication) further added 16% to the equation. The increase in food prices were a direct result of the shortages following the floods – Food & Beverage prices went up by 5.10% and 5.26% sequentially during Aug11 and Sep11 respectively.

    High base effect to kick in
    Moving forward we expect that the high base effect (average inflation Sep-Dec10: 15.50%) will allow inflation to ease off. However, implementation of reforms (rise in power tariff, removal of gas subsidies) can serve to arrest the decline in inflation. Moreover, with Ramadan approaching, the declining trend in food prices is expected to reverse further fuelling inflation.
    While we believe that a decline in inflation can form the basis of potential monetary easing, we tag government borrowing as the key factor that will determine the stance SBP adopts moving forward.
    (GLOBAL)
    Click Here For: "Daily Reports From Different Brokerage Houses"

    #4
    Amin Khan

      CAPTAIN

    • Member
    • 9,048 posts
    • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    Economy: CPI stood at 13.92% in FY11.(Update Pulse)

    Update Pulse…

    • CPI stood 13.92% in FY11 as against GoP’s revised target of 15.50%.
    • CPI was seen at 13.13% YoY in June’11 whereas on MoM basis it was recorded at 0.55%.
    • GoP has set the CPI target of 12.00% for FY12.
    • Discount rate is unlikely to see an ease in FY12.

    FY11: Food and energy prices drove inflation…
    The Federal Bureau of Statistics (FBS) released inflation numbers for the month of June’11. As per the data, average inflation (July to June) consumer price index (CPI), Sensitive Price Indicator (SPI) and Wholesale Price Index (WPI) stood at 13.92%, 18.18% and 23.35%YoY respectively. The main reason behind this persistently higher inflation was owing to 1) substantially higher government borrowings from SBP during FY11, 2) rising oil and energy prices and 3) higher food prices owing to devastating floods which disrupted the whole supply chain.
    (SC)

    Click Here For: "Daily Reports From Different Brokerage Houses"

    #5
    Amin Khan

      CAPTAIN

    • Member
    • 9,048 posts
    • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    Higher oil price to impact inflation and currency

    We highlight upside risk to our FY12 currency and inflation estimates on the back of Arab light price estimate upgrade by BofAML to US$107/bbl (US$93/bbl previously).

    With a 12% upgrade in oil price estimate, we raise our base-case CPI estimate from earlier 12.0% to 12.4% due to direct impact of potential fuel price increase.

    As the expected rise in oil price is skewed towards 4QFY12E (8% QoQ increase) we believe PKR/USD pressures will remain contained in 1HFY12, while inflation will likely soften in 2QFY12, post Ramadan season.

    We believe near-term risk to credit ratings is low where the continuation of the IMF program or otherwise beyond Sep-11 could be a major swing factor.
    (KASB)
    Click Here For: "Daily Reports From Different Brokerage Houses"

    #6
    Amin Khan

      CAPTAIN

    • Member
    • 9,048 posts
    • Joined 24-August 08
  • Skin: Main Blue
  • Offline
    • Gender:Male
    • Country: Country Flag

    Current mood: Mellow
    Reputation: 905
    CPI is expected to register a YoY rise of 12.46% YoY for Jul’11

    We expect Consumer Price Index (CPI) based inflation for the month of Jul’11 to register a 12.46% YoY rise compared to a rise of 13.13% YoY recorded in Jun’11. On a MoM basis we expect the CPI to register an increase of 0.63% compared to a rise of 0.55% experienced during Jun’11, owing to rising food prices. However we believe rising inflation is not just a symptom of higher global commodity prices, in particularly food but it also reflects strong monetary growth over the years led by public sector credit growth.

    A 0.3% rise in SPI; all not reflecting
    For the month of Jul’11 we expect the SPI to post a mere rise of 0.3% MoM against 1.2% MoM registered in Jun’11. This price surge we believe is owed to a continual strong demand in food products prior to the start of Ramadan. We expect this rise in SPI is more of a temporary effect and will likely fade away past Ramadan. We based this given the world commodity prices have started to normalize, better than expected staple crop projection in Pakistan in FY12 and 12 month moving average of SPI suggesting a change of trend. However going forward in FY12 inflationary risk will mainly emanate from rising non-food and non energy prices alongwith monetary expansion experienced in past while food prices will likely go backstage.

    Inflation not driven by food prices alone…
    Core inflation measured through the non-food non-energy (NFNE) has consecutively registered double digit YoY growth in May’11 and Jun’11 of 10.2% and 10.4% respectively. We believe this price rise is contributed (if not solely) through growth in money supply. Strong expansion in money supply caused by excessive credit growth, mainly dominated by public sector borrowing (registering in excess of 25% YoY growth since Jan’09). For instance government borrowing which to date stands at PKR ~64bn (~23% YoY rise in stock) has led to private sector crowding out (registering an average ~4.2% YoY rise in FY11). Hence justifying the reason that the inflation we are witnessing in the country is not simply imported one (oil, food, raw material etc.), rather a monetary phenomenon.

    Policy response…
    We believe if country headline inflation simply responds to temporary factors, such as higher commodity prices (oil, food, raw material etc.) then adopting monetary/fiscal tightening, would not be enough to bring the inflationary pressures down. While, if inflation is largely driven by strong domestic demand with reference to monetary expansion, then more tightening measures are required. Hence we flag high government borrowing in FY12 to be the key risk to our monetary policy stance. However we expect the headline inflation to register a 12.6% YoY rise in FY12 compared to 13.9% YoY in FY11, which may give some room to SBP to start easing from the 2HFY12.
    (AH)
    Click Here For: "Daily Reports From Different Brokerage Houses"






    Karachi Stock Exchange (KSE) Daily Reports


    Top Pakistani Sites        Haroof Top Sites    Promoted at Global Promote

    Indemnity, Disclaimer & Disclosure Notice:
    • By visiting TeziMandee.com you indicate your acceptance of our Forum Rules Disclaimer & Disclosure and indemnify TeziMandee.com, its associates and related parties of all claims howsoever resulting from the usage of the forum.
    Disclaimer: Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility. TeziMandee.com will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information.
    Disclosure: The information in this forum is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.
    • All names or products mentioned are trademarks or registered trademarks of their respective owners.

    Copyright © 2006 - 2012, TeziMandee.com All Rights Reserved.
    eXTReMe Tracker