The backbreaking inflation, as measured by CPI in Pakistan, fell to 11.56 per cent YoY during the month of August, far lesser than the consensus forecast and July reported CPI of 13.8 per cent. “The decline is primarily attributed to high base effect of last year kicking in due to index rising on account of floods last year,” said Nauman Khan an analysts at topline securities.
Moreover, analysts said, the redistribution of weights away from Foods and Beverages in the newly composed CPI basket also caused the numbers to decline. However, he said, the month-on-month inflation in August stood higher at 1.4 per cent on account of Ramadan factor. As a result of lower than expected YoY inflation, the equity and bond markets rallied, he added. Stocks went up 1.5 per cent today while benchmark 1-year T-Bill yield fell by 7 basis points while 10-year government bond settled at 13.17 per cent down 10bps, Khan said.
