Karachi, June 02, 2020: Headline inflation stood at 8.2 percent YoY in May-2020, compared to 8.5 percent YoY in Apr-2020. On MoM basis, CPI increased slightly by 0.32 percent during the month. For 11MFY20, CPI averaged 10.94 percent YoY and has dipped below the 11-12 percent range provided by the central bank (SBP itself suggested that the FY20 number might fall below this range).
Falling global crude oil prices have led the government to reduce local POL prices, which has reflected in motor fuel prices in the transport basket of the CPI, which was the largest contributor towards containing inflation during the month.
Food inflation remained on the higher side during May-2020, which was expected owing to Ramadan, where higher chicken and milk prices were leading contributors.
Historical analysis suggests that chicken prices normally slide following Ramadan and around the period leading to Eid-ul-Azha.
However, this time it is possible that prices might not decline as sharply owing to supply-side factors exacerbated by the lockdown. Urban CPI (U-CPI) declined to 7.3 percent YoY in May (7.7 percent YoY in April) and Rural CPI (R-CPI) was slightly lower at 9.7 percent YoY compared to 9.8 percent YoY in April.
