Business

November inflation to spike on gas price adjustment, dashing slowdown hopes

Published

1 year ago

Farwa

CPI likely to rise to 28.6-29.6% year-on-year in Nov.
Inflation rate could register 2.1% month-on-month jump.
Weekly SPI on Nov 16 showed 480% surge in gas prices.

KARACHI: Inflation is expected to surge in November, primarily due to a massive hike in gas prices, according to brokerage reports released on Wednesday.

The consumer price index (CPI), which measures changes in the prices of goods and services, is likely to rise to 28.6-29.6% year-on-year in November, up from 26.9% in October.

A report by brokerage firm Insight Securities predicts that the inflation rate will register a 2.1% month-on-month jump, defying earlier expectations of a gradual slowdown from September onwards. Optimus Capital Management estimates that the CPI will increase by 2.9% month-on-month, primarily driven by an 11.6% jump in the housing index due to gas price revision and a 1.6% increase in the food index.

The primary cause behind the expected spike in November inflation is the adjustment of recently imposed fixed charges within the gas tariff structure. The weekly sensitive price index (SPI) inflation released on November 16 showed an astonishing 480% surge in gas prices.

However, a slight respite is expected from a 4.0% decrease in the transport index due to lower average fuel prices in November. The impact of the gas price hike was partially mitigated by the decline in fuel prices and the month-on-month fall in the food commodity adjustment (FCA).

Food inflation is attributed to a sharp increase in the prices of perishable items such as onions, tomatoes, potatoes, and eggs, as well as tea. Despite an increase in supply from imports, wheat prices still rose month-on-month, while sugar and cooking oil showed a significant decline during this period, based on weekly SPI data from the Pakistan Bureau of Statistics.

The recently implemented axle load regime, which limits the weight of goods transported by trucks, could put some pressure on the price levels of goods.

The higher October fuel cost adjustment (FCA) demanded at Rs3.5 per kilowatt hour (to be applicable in December) on electricity charges and a second-round impact of gas price increase could keep inflation under pressure. However, the base effect during the second half of the fiscal year is likely to help absorb the impact.

Commodity and energy prices, along with the exchange rate of the rupee against the US dollar, will remain important factors in keeping the CPI under control.

The reports projected the average inflation for the first five months of the fiscal year 2023/24 (July-June) to be 28.5%, compared with 25.2% in the same period last year and with an estimated ending at 19.4% year-on-year in June 2024.

They predicted that the State Bank of Pakistan (SBP) is likely to maintain the interest rate in its upcoming monetary policy committee (MPC) meeting due to the higher-than-estimated inflation in November. However, the SBP could opt to initiate an easing cycle in the first quarter of 2024, given the high base effect in the second half of the fiscal year.

Business

Remittances Increase 25.2% in January 2025: $3.0 Billion Inflow

Published

18 hours ago

Farwa

Remittances from Pakistani workers totalled US$3.0 billion in January 2025, representing a 25.2% increase from the previous year.

The cumulative remittances for July through January of FY25 were 20.8 billion dollars, up 31.7 percent from 15.8 billion dollars during the same period in FY24.

In January 2025, the United States of America contributed 298.5 million dollars, the United Kingdom contributed 443.6 million dollars, the United Arab Emirates contributed 621.7 million dollars, and Saudi Arabia contributed 728.3 million dollars.

Business

In January, Pakistan’s remittances rose by 25%.

Published

19 hours ago

Farwa

In January 2025, Pakistan had a notable 25% growth in domestic remittances, with inflows hitting a record $3 billion for the month.

In a post on X, Khurram Shahzad, advisor to the Federal Finance Minister, revealed the most recent data, showing a sharp increase in remittances. The overall amount of remittance inflows from July 2024 to January 2025 was $20.8 billion, which is a 32% increase from the previous year.

According to official documents, the federal government’s non-tax revenue increased by Rs1,623 billion during the first half of the current fiscal year, from July to December, to Rs3,602 billion, up from Rs1,979 billion during the same period last fiscal year. The petroleum levy accounted for a significant portion of the increase, collecting an additional Rs76.64 billion, bringing the total petroleum levy revenue to Rs549 billion, up from Rs472.77 billion during the same period last year. Shahzad described the increase in remittances as a positive development for Pakistan’s economy and external accounts, and he projected that if this trend continues, annual remittances could surpass $35 billion by the end of the fiscal year.

Significant non-tax revenue was also generated by the State Bank of Pakistan (SBP), which reported a profit of Rs2,500 billion from July to December, a substantial increase from Rs972 billion during the same period the previous year.

Business

It is anticipated that the cost of electricity will drop by Rs2 per unit.

Published

19 hours ago

Farwa

In an effort to help consumers, the government is attempting to lower electricity costs nationwide.

A task team has started negotiating with 45 more power facilities to reduce electricity rates, according to Ministry of Energy sources.

According to the plan, the profit margin of about 25 state-owned power plants will be cut from 19% to 13%, which will result in an electricity tariff drop of 50 paisa per unit. Moreover, rather than total production capacity, these power plants will now get compensation based on actual electricity generation.

It is anticipated that these actions will result in a Rs2 per unit drop in the overall electricity bill. The task force’s suggestions will probably be brought up for approval in the upcoming cabinet meeting.