The Consumer Price Index (CPI) inflation in the country during the month of November was recorded further downward at the lowest level of its revised based at 6.9 percent as against 7.7 percent in October.
“The number is far below the market consensus which was expecting it in the range of 7.5-8 percent,” said Topline analyst Nauman Khan.
On MoM basis, inflation stood at –ve 0.4 percent as against 0.4 percent last month, while the average inflation in 5MFY13 stood at 8.4 percent versus 10.2 percent in the same period last year.
“Though, we still await how individual heads contributed to subdued number but we believe subdued food inflation would be the chief contributor on account of post Eid phenomena,” said Khan.
The soft inflation number heightened the chance of average FY13 inflation to fall well below the government expectation of 9.5 percent, even after incorporating in high MoM inflation in 2H. “We maintain our view that soft inflation numbers could allow the room for the central bank to continue the process of monetary easing and we expect another 50-100bps cut in the policy rate in the upcoming monetary policy schedule due in second week of December,” said the analyst. He said his conviction to the idea also comes from the central bank’s recent focus on growth dynamics which was also highlighted in the recent SBP governor’s interview.
