Market analysts expect a hike in the rate following the implementation of revenue and utility tariff adjustments, which will be revealed today together with the June 2023 inflation figures.
The pass-through impacts of new levies and utility tariff hikes have already had an influence on general prices, so the shock to the disinflation trend witnessed earlier this year is only projected to be temporary.
After reaching a peak of 54.1 per cent in December 2022 and a low of 41.2 per cent in April 2023, inflation had begun to drop in the first half of 2023. It did, however, go up by 100 basis points in May, reversing the decreasing trend.
The first- and second-round effects of the revenue measures, along with smouldering food prices, are expected to raise headline inflation in June and maybe July, according to GCB Capital.
According to GCB Capital, the consumer price index (CPI) increase is a one-time shock that will normalize in the next month, supporting inflation’s return to a downward path. The inflation outlook, however, may be seriously jeopardized by June’s persistent pressures on food prices.
“We expect the second-round effects and lagged impact of the revenue and tariff measures to result in another marginal increase in headline inflation for June and potentially July 2023,” GCB Capital said in its outlook.
“However, we expect inflation to resume a decline thereafter, supported by favourable base drift and easing price pressures.”
However, despite an unexpected increase in inflation in May 2023, Apakan Securities predicts that the base effect will cause inflation to moderate in June 2023.
Future policy choices will be influenced by the June inflation numbers, which will be released on Wednesday and offer additional price information.
Source:b&ft
