KARACHI: Consumer Price Index (CPI) for the month of December 2018 clocked-in at 6.2 percent as compared to 6.5 percent registered in November 2018. Housing & utilities (CPI weightage 29.4 percent) continues to be the largest contributor in headline inflation (2.4pps), mainly on the back of surge in gas prices (85.3 percent YoY), uptick in house-rent (6.7 percent YoY), rise in construction inputs/wages (11.9 percent YoY/10.4 percent YoY) along with increase in costs associated with water supply (13.6 percent YoY). Moreover, transport group was another major contributor in November 2018 headline inflation (1.1pps) as price of motor fuel & transport services incremented 25.8 percent YoY and 16.0 percent YoY, respectively. Moreover, increase in prices of clothing & footwear (0.6pps) and hike in cost of education (0.5pps) were also amongst major contributors in Dec’18 inflation reading. Core inflation (i.e. non-food, non-energy) clocked in at 8.4 percent YoY during December 2018 versus an identical increase of 8.3 percent YoY depicted in the preceding month. On a MoM basis, NFNE inflation arrived at 0.3 percent in December 18 versus an increase of 0.4 percent recorded in the previous month. Food inflation arrived at a slender 0.9 percent YoY during the month as compared to an increase of 1.8 percent YoY registered in November 2018, with major contribution emanating from hike in prices of spices (15.0 percent YoY), meat (13.2 percent YoY), honey (12.4 percent YoY), tea (11.1 percent YoY), dry fruits (10.4 percent YoY), rice (8.9 percent YoY), chicken (8.9 percent YoY) and several other food group constituents. “With regards to inflation outlook, we estimate average headline inflation for FY19 to arrive within 7.5 percent-8.5 percent range (6MFY19 - 6.05 percent YoY) due to anticipated re-emergence of food inflation, increase in utility rates & lagged impact of hefty PKR devaluation,” a report issued by Pearl Securities said. In terms of monetary policy outlook, State Bank of Pakistan (SBp) has already hiked interest rates by a hefty 425bps to 10 percent during 2018. “With several macroeconomic challenges such as mammoth import bill, depleting foreign exchange reserves and rise in inflation levels, we expect SBP to continue hiking interest rates in 2019, albeit at a much lower quantum, in order to arrest any abrupt increase in inflationary pressure and provide stability to deteriorating macros,” Pearl Securities report said.