Inflation slows to 4%-5% in December: Ministry

December 30, 2024 (MLN): The headline inflation is anticipated to remain within the range of 4%- 5% in December 2024, according to the Finance Ministry's monthly economic report.

In November CPI inflation was recorded at 4.9%  as compared to 7.2% in the previous month and 29.2% in November 2023. 

Accordingly, this takes the average yearly inflation of 5MFY25 to 7.88% compared to 28.62% in 5MFY24.

On a monthly basis, CPI rose 0.5% in November 2024 as compared to the 1.23% rise of the previous month and an increase of 2.7% in November 2023.

The further easing of monetary policy in December is expected to stimulate economic activity and the rising demand for credit, especially from the private sector, is a positive signal of growing confidence in the economy, the report stated. 

This momentum is poised to accelerate, fostering higher production levels and enhanced economic output in the coming months.

On the external front, it is expected that hard-earned stability will continue on the back of remittances and export inflows with decent imports.

This will be complemented by exchange rate stability and contained inflation

"To achieve the target of FY2025 and sustain economic recovery, the government is cognizant to achieve the crop production targets by facilitating the farmers to achieve the desired production level," the report reads.

However, weather conditions may pose challenges, as below-normal rainfall may lead to water stress during the critical emerging stage of Rabi crops like wheat and barley, especially in rain-fed agricultural zones.

On the industrial front, despite challenges in certain sectors that remain in negative territory, the economy's resilience is underscored by the robust performance of high-weighted sectors, which continue to drive LSM in October.

Further, the automobile and cement sectors exhibited strong performance in November, providing a critical boost to their allied industries.

The potential ripple effect and the interconnectedness of industrial sectors may reinforce a broader growth trajectory, it said.

Going forward., improved fiscal performance during July-Oct, driven by higher revenues and prudent expenditure management, is expected to create fiscal space for development spending and support sustainable economic growth.

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