Pakistan’s CPI seen returning to double digits in August as food, fuel costs surge

Analysts at Ismail Iqbal Securities, Topline Securities and JS Global forecast year-on-year inflation of between 10.75% and 11.3% in August, according to Business Recorder. That range is well above July's 9.21% and far higher than the 3% seen a year earlier. The brokerages attribute the jump to both higher prices and an unfavourable base effect.

Food prices are the main monthly driver, with Topline Securities expecting food inflation of 1.82% month-on-month on higher prices for onions, eggs, gram pulses and wheat. Ismail Iqbal Securities expects food to add about 70 basis points to the monthly rise, though most of that should reverse as supply normalises. Transport costs add further pressure, with motor fuel seen rising close to 7% amid higher international oil prices and wider dealer margins.

JS Global, which expects 10.9% inflation for August, said geopolitical flare-ups and disruptions to key energy trade routes led the SBP to keep a cautious stance. The monetary policy committee left the policy rate unchanged at 11.50% at its latest meeting. In an alternative scenario with prolonged Middle East tensions, higher imported energy costs could push inflation to 9% temporarily before it settles near 8%.