Macroeconomic Forecast Pakistan

Headline consumer price inflation (CPI) came in at 10.1% y-o-y in January, up slightly from 9.7% in the previous month. Similarly, wholesale price inflation edged higher to 8.7% y-o-y, from 8.3% previously. The uptick in the headline rate was mainly due to an increase in the cost of utilities, with utilities inflation rising from 6.4% y-o-y to 7.7% in January. While the latest data poses upside risk on our end-FY2011/12 (July-June) CPI forecast of 9.0%, we maintain that recent money supply trends still point towards further disinflation. Broad money (M2) growth came in at 12.4% y-o-y in November, well below the 18.2% high in August.

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