Pakistan’s Finance Division says inflation to ‘ease out’ to 24-25% in January

Customers bargain as they buy cereals and legumes at a shop in Karachi on June 8, 2023. (AFP/File)

• Inflation expected to remain at ‘moderate level’ for remaining FY24 due to stable exchange rate, better supply position, says Finance Division
• Finance Division says overall ‘positive’ monthly outlook evident from 2.13 percent growth achieved in caretaker government’s first four months

ISLAMABAD: Inflation is expected to “ease out” to 24-25 percent in January 2024, Pakistan’s Finance Division said on Wednesday in its monthly economic outlook report, citing a stable exchange rate and“better supply position” as reasons for the expected change.
Pakistan’s consumer price index (CPI) jumped to 29.2 percent in November on a year-on-year basis while headline inflation in the country was recorded at 26.8 percent in October.
In late October, Pakistan announced a sharp increase in the price of natural gas for most households and industries ahead of Islamabad’s first review of a $3 billion International Monetary Fund (IMF) bailout it secured in July. The hike in gas tariff triggered a rise in inflation for the South Asian country.
However, in its monthly economic outlook report, the Finance Division said it sees inflation for the remaining months of the current financial year at a “moderate level” despite the upward revision in gas prices. It cited a “stable exchange rate, contained aggregate demand, better supply position, moderation in the international commodity prices, and favorable base effect” as the main factors.
 “Inflation is anticipated to remain around 27.5-28.5 percent in December 2023 and further ease out to 24-25 percent in January 2024,” the report said.
The Finance Division said that reduced petrol and diesel costs would also compensate inflationary pressure caused by higher gas prices, as the government’s move to slash petrol prices would also bring down transportation and production costs in the days to come.
“Efforts of the sub-national governments to implement lower fares of public transport and freight charges in line with the reduced fuel prices would further ease the inflationary pressure,” it added.
In its final remarks, the Finance Division said Pakistan’s overall economic outlook remains “optimistic” due to the receding inflationary pressures, positive prospects in agriculture and signs of potential recovery in the industrial sector.
“The optimistic economic outlook is also evident by the 2.13 percent growth achieved in the first quarter of FY2024, largely contributed by agriculture and industry,” the report stated.