Inflation likely to hover around 8%-9% in Sep, Oct: FinMin Report

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By MG News | September 27, 2024 at 03:53 PM GMT+05:00

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September 27, 2024 (MLN): Inflation is expected to remain within the range of 8.0% to 9.0% in September and October 2024, according to the Finance Ministry's monthly economic report.

That is notably higher compared to MG Research's forecast of a 7.5% yearly inflation rate for September.

CPI inflation receded to single digit, 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%.

Pakistan's economy is indicating positive developments during the first two months of FY2025 as most of the economic indicators have shown improvement, the report noted.

Inflation has dropped to single digit, industrial output has increased, and large exporting sectors have witnessed growth, reflecting an optimistic outlook for exports.

The current account deficit contracted, while the fiscal sector remained resilient, mainly attributed to prudent measures. This trajectory is expected to continue in the coming months.

Following a phase of decline, LSM is now regaining its footing and major exporting sectors show readiness to scale up production.

This recovery is expected to be bolstered by a favorable external environment, a stable exchange rate, and declining inflationary pressures.

Moreover, an accommodative monetary policy stance, improved investor's confidence, and the global market recovery, will provide additional support to foster the sustainable industrial growth.

Government's commitment to fiscal consolidation will contribute to improved fiscal accounts.

For agriculture, the outlook of Kharif 2024 production, weather being critical factor will pave the way for productivity. Inflation is expected to remain within the range of 8.0% to 9.0% in September and October 2024.

On external front, it is expected that exports and imports will observe an increase in momentum. In September 2024, the exports are likely to remain within range of $2.5-3.0 billion, imports $4.5-5.0bn, and workers' remittances $2.7-3.2bn.

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