Naeem Research projects the annual headline inflation on the consumer price index (urban CPI) for March to increase to 5.5%, up from 5.3% in the previous month. The group also projects the CPI index to record 106.7 points, mostly reflecting demand-pull inflationary pressures.
The monthly headline inflation rate (urban CPI) is estimated to increase to 1% in March, versus 0% recorded in February.
The figures largely reflect a jump in the prices of volatile food items, such as fruit and vegetables, as domestic market imbalances intensify amid concerns over the coronavirus (COVID-19) pandemic. Alongside the disruptions caused by the unexpected storm in March, which caused marginal supply disruption, the concerns have led to citizen stockpiling food.
Naeem Research added that the figures are based on locally gathered data on prices, whilst also taking into consideration historical seasonality patterns. The food & non-alcoholic beverages index (32.7% of urban CPI), is projected to increase to 0.5% on a month-on-month (m-o-m) basis, versus -0.1% in Feb, due to the higher prices of fresh vegetables, fruits, and rice
“In addition, our estimates assume a sizable increase in prices of healthcare related index items, such as medical equipment and hospital service fees which are likely to have increased in March,” Naeem Research added.
The group underlined that the model assumptions however, do not take into consideration the roughly 10% reduction in power tariffs for heavy industries that were implemented in March. The downside risks to the inflation estimate exists in the event of the same being included within the CPI index