Pakistan Bureau of Statistics (PBS) has recently revealed the inflation numbers for the

monthofJuly14.TheRamzaneffecthasplayeditsroleinboostingtheinflationnumbers
forthemonthwhereM/Minflationwitnessanuptickof1.7%andY/Yinflationsettledat
around7.88%.ItisinterestingtonotedespiteincreaseinM/Mfoodinflationby2.8%,Y/Y
inflationwassubduedat6.2%.Theprimaryreasonsightedwasthehigherbaseofpreced
ingyear which kept the Y/Y inflation lower. Eid euphoriaalong with wedding seasonhas
kept the clothing and footwear inflation on the higher side. Going forward the CPI infla
tionmaytaperoffabitintheupcomingmonthsastheRamzaneffectsubsides.Further
moregovernmenthassofarkeptthepetroleumpricesintactatthesamelevelwhileprice
ofCNGandfurnaceoilwereincreased.ThetrimmedcoreandNFNEinflationdidwitness
amarginalslideby0.3%and0.4%respectivelyto7.6%and8.3%respectively.
ContributingFactorsTowardsCPIIndexJuly14
Pricesofperishablefooditemsincludingtomatoes,onionsandpotatoesalongwith
freshvegetablesandfruitcontributedheavilytowardtheinflationnumbers.thiswas
largelyonaccountofextendeddemandintheRamzanseason
Houserentcomponenthavinga21.8%intheindexpushedthehousingandelectric
ity segment inflation. Nevertheless we may not witness the same kind of uptick in
theupcomingmonthsinthehouserentsegment
The shopping festivity of Eid pushed the prices of clothing and footwear segment
inflationwhichmovedby10%Y/Y.Furthermoresegmentrelatedtorestaurantsand
hotelsalsocontributedtowardscurrentmonthinflationnumbers
Post budget implication of transportation segment played its part in pushing the
segmentinflationonaccountofmotorvehicletaxrate
GoP has kept the fuel prices unchanged at current level for the month, which con
tributedtowardslowerinflationnumbers
InflationGoingForward
InflationinthemonthofJuly14waslargelyexpected,webelievetheinflationmaytaper
offinAugust14byasubstantialmargin.NeverthelessY/Yinflationmaynotdipbymuch
backedbybaseeffect.Incasethegovernmentplanstoraisetheelectricitytariffinaccor
dance with the guidance provided by IMF, inflation may bounce back aggressively. We
continue to believe inflation numbers for the year may fall in the range of 8.9% 9%.
Budgetary measures are likely to impact the inflation number in the upcoming months
whichmaybeassessedproperly,duetotheirindirectimplication.

HABIBMETROFinancialServices
PakistanEconomy
Aug07,2014


SectorUpdate
Note:PleaserefertothelastpageforAnalystCertificationandotherimportantdisclosures.
BilalAsif
AC

bilal.asif@hmfs.com.pk
InflationVsInterestrate

Source:SBP&PBS
RamzanEffectM/MInflation@1.7%
NDA/NFARatioVsCPIInflation

Source:SBP&PBS
4%
6%
8%
10%
12%
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6MKibor CPIYoY
DiscountRate
4%
6%
7%
9%
10%
12%
4.0
44.0
84.0
124.0
164.0
204.0
244.0
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NDA/NFARatio CPIInflation
2

SectorUpdate
HABIBMETROFinancialServices

AnalystCertificate
The research analyst denoted AC on the cover of the report on with the name of analyst who has written the report. The analysis and
viewsexpressinthisreportexclusivelyreflecthis/herpersonalviewsaboutthesubject,companyorsecurity.Furthermorehis/hercom
pensation was, is or will not be directly related to the recommendation or views articulated in this report. The information provided in
thisreportisbasedoninformationavailabletotheanalystandinaccordancewithbestofhis/herknowledge.
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InflationIndex IndexWeights
CPI CPI Index
YTD MoM 1MFY15 1MFY14
Food&NonAlcoholic 29.84% 5.10% 0.49% 213.61 203.25
Nonperishablefooditems 4.99% 11.95% 15.71% 261.59 233.67
Foodandbeverages 34.83% 6.20% 2.79% 220.48 207.61
Beverages&Tobacco 1.41% 22.24% 2.52% 265.82 217.46
Clothing&footwear 7.57% 10.03% 1.23% 209.51 190.42
Housingwater&Gas 29.41% 8.94% 1.23% 171.62 157.54
Furnishing&household 4.21% 9.18% 0.16% 204.42 187.23
Health 2.19% 7.40% 0.35% 173.40 161.45
Transport 7.20% 5.06% 1.59% 198.38 188.83
Communication 3.22% 0.18% 0.02% 129.85 129.62
Recreation&culture 2.03% 5.76% 0.01% 188.76 178.48
Education 3.94% 16.49% 0.23% 191.33 164.25
Restaurant&hotels 1.23% 11.86% 0.20% 239.23 213.87
Miscellaneous 2.76% 8.00% 0.86% 216.98 200.91
Total 100% 7.88% 1.70% 198.05 183.58
Source:PBS
www.hmfs.com.pk
EconomicGrowth

Source:SBP&PBS
2.5%
4.5%
6.5%
8.5%
10.5%
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6MKibor CPI
NFNE TrimedCore