- August 2019 Inflation likely to touch up to 11.5% due to persistent increase in food and Fuel Prices
CPI inflation for the month of August-2019 is expected to touch Eight Years high level of 11.5% YoY as compared to 10.3% YoY noted in the previous month.
Prime reason for high inflation is due to a persistent increase in food and fuel prices. The Mint PK projects CPI inflation to stay high until the end of the year primarily due to the lagged impact of ~21% currency depreciation during last one year.
The Monthly increase in August CPI is expected around 1.3% as compared to July. Fuel prices which have 3% weightage in Inflation basket have risen by around 4% during the month.
While food items having a total weight of ~35% is expected to contribute majorly in monthly inflation as the drastic increase was observed in the prices of chicken, Ginger, tomato and potato prices due to Monsoon and festive season of Eid.
The core inflation is likely to stay stable around 8% in August 2019, similar to last month.
Going onwards, the interest rate increase of 5.75% in the last one year is expected to contain the inflation due to the lagged impact of fiscal and external measures taken by the government to stabilize the economy. Moreover, Government halting its borrowing from Central Bank will also help in controlling the inflation going onwards.