Inflation likely to hover around 18.5-19.5% in April 2024: Ministry

April 30, 2024 (MLN): Inflation is projected to hover around 18.5-19.5% in April 2024, with expectations of a gradual easing further to 17.5-18.5% in May 2024. according to the Monthly Economic Update & Outlook released by the Ministry of Finance on Tuesday.

At the same time, MG Research estimates show inflation will likely ease to about 17% in April.

March 2024 marked the third consecutive decline in CPI inflation YoY basis, inflation descended from 35.4 percent to 20.7 percent YoY basis, reflecting the lowest inflation after 18 months.

The inflation outlook for April 2024 continues a downward trajectory, attributed to the favorable base effect from the previous year and improvements in the domestic supply chain of essential items.

The inflation outlook appears moderate as the government is determined to reduce inflation by actively taking strict administrative measures. Increasing crude oil prices in the international market have prompted the government to raise domestic petrol prices.

The rise in petroleum prices is expected to be offset by the government initiative to reduce wheat flour prices and administrative measures.

The Food and Agriculture Organization's food price index registered an increase of 1.1 percent in March 2024 over the revised February level.

The increase was observed in vegetable oils, dairy products, and meat while a decline was recorded in sugar and cereals.

The report also noted that Pakistan's economic journey in the ongoing FY2024 has been optimistic.

Recently IMF Executive Board has approved the second review under the SBA for Pakistan allowing for an immediate disbursement of $1.1 billion.

Economic growth is showing signs of recovery while inflation is trending downward.

These improvements are primarily due to favorable external conditions and sound prudent policy management.

The growth in the 1st and 2nd quarter has been estimated at 2.5 percent and 1.0 percent, respectively.

Both fiscal and external sectors have demonstrated resilience.

The market confidence is also upbeat, reflected in the notable performances of Pakistan Stock Exchange (PSX).

The economy is on a resilient track to achieve modest growth this year, setting the basis for better performance in the upcoming fiscal year.

The Monthly Economic Indicator (MEI) has maintained an upward trajectory since the start of FY2024.

The positive trend is propelled by YoY growth in LSM, a deceleration of YoY inflation, and an improvement in foreign economic conditions.

Furthermore, the stability in the external sector has eased the pressure on the exchange rate.

All these positive factors indicate a further improvement in economic activity in the coming months.

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