Pakistan’s inflation is expected to slow in September, but higher fuel and electricity costs are likely to keep pressure on household budgets and make the State Bank of Pakistan’s next policy decision more difficult.
Four brokerage houses have estimated September consumer price inflation between 9.9 percent and 10.5 percent year-on-year. This would mark a decline from 11.15 percent in August, but remain well above the 5.61 percent recorded in September last year.
Topline Securities expects inflation at around 10.25 to 10.3 percent, with prices rising 1.3 percent month-on-month. It estimates fuel prices increased 6.5 percent during the month, while electricity charges rose 9.58 percent.
The brokerage said the increase in electricity costs was linked to a higher Fuel Charges Adjustment and a positive Quarterly Tariff Adjustment. LPG prices also rose 2.61 percent.
Ismail Iqbal Securities has given a higher estimate of 10.5 percent. It said energy costs are expected to account for a larger share of September’s inflation, even as food pressures ease.
The brokerage estimates housing costs added around 55 basis points to inflation, mainly due to a 12.6 percent increase in electricity charges. Transport costs are expected to add another 35 basis points after petrol and diesel prices rose sharply during the month.
Food could add around 25 basis points, with onion prices rising 32 percent and fresh vegetables remaining expensive.
Ismail Iqbal Securities said the shift from food to energy-driven inflation is important because food price increases can ease when supplies improve, while higher fuel and electricity costs can feed into transport, freight and other prices.
Abbasi and Company expects September inflation at 10.2 percent, citing higher prices of wheat flour, meat, rice, fresh milk, cooking oil and vegetable ghee, along with rising fuel, transport and housing costs.
Growth Securities has the lowest forecast at 9.9 percent. It expects the impact of higher fuel prices to be partly offset by softer food prices.
The brokerage expects inflation to remain in the 9 to 10 percent range until March 2027 if fuel prices stay around Rs390 to Rs400 per litre.
The inflation outlook also creates uncertainty for monetary policy. The SBP kept its policy rate unchanged at 11.5 percent this month. Ismail Iqbal Securities expects another hold in October, while Growth Securities says the central bank could raise the rate by 50 to 100 basis points if fuel prices remain elevated.
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