IMF sees Pakistan inflation dropping to 9.5% in FY25

September 28, 2024 (MLN): The International Monetary Fund (IMF) has revised down the inflation forecasts for Pakistan, projecting consumer price gains to average 9.5% in FY25 from the earlier projection of 12.7%, according to a report issued.

That compares with the average price gains of 23.4% in FY24.

The IMF said that inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.

Reflecting disinflation and steadier domestic and external conditions, the State Bank of Pakistan has been able to cut the policy rate by a total of 450 bps since June also supported by an appropriately tight FY25 budget.

The Executive Directors of IMF said they support continued tight and data-driven monetary policy to ensure that inflation continues moving toward the target range on a sustained basis.

To note, CPI inflation receded to lowest in 34 months in August 2024, recorded at 9.6% on year-on-year basis compared to 27.4% in the same month last year.

On MoM basis, it increased by 0.4% in August 2024 compared to an increase of 2.1% in the previous month and an increase of 1.7% in August 2023.

Major drivers contributing to the YoY increase in CPI include perishable food items (41.0%), Housing, Water, Electricity, Gas and Fuels (22.2%), Health (17.8%), Clothing and Footwear (17.3%), Transport (3.2%), while non-perishable food items declined by 2.6%.

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