by: TN Media News:
In a concerning economic development, Pakistan’s headline inflation soared to 29.2% year-on-year in November, marking a significant uptick from October’s 26.9%, according to the Pakistan Bureau of Statistics (PBS). The month-on-month reading saw an increase of 2.7%. The cumulative average inflation for July-November reached 28.62%, compared to 25.14% during the same period last year.
Breaking down the inflation figures, urban areas experienced a surge in CPI inflation to 30.44% year-on-year in November 2023, up from 25.5% the previous month and 21.6% in November 2022. On a month-on-month basis, the increase was 4.34% in November 2023. Rural areas reported a year-on-year CPI inflation of 27.53% in November 2023, down from 28.9% in the previous month, with a month-on-month increase of 0.40%.
Anticipations from brokerage houses foresaw November’s inflation exceeding 28%, attributed in part to an increase in gas tariffs. JS Global had projected CPI-based inflation at 28.26%, emphasizing the impact of gas prices on the monthly index calculation. Arif Habib Limited (AHL) projected a slightly lower figure of 28.2% for November, citing a notable rise in gas tariffs as a primary contributing factor.
The economic scenario in Pakistan faces multiple challenges, with high inflation being one of the pressing issues. The recent staff-level agreement between Pakistan and the IMF under the Stand-By Arrangement (SBA) aims to provide financial assistance, pending approval by the IMF’s Executive Board. The IMF expressed an expectation of declining inflation in the coming months, considering receding supply constraints and modest demand.
Despite the State Bank of Pakistan (SBP) maintaining the key policy rate at 22% in October, the MPC acknowledged potential risks to the FY24 outlook, such as global oil price volatility and increased gas tariffs. However, offsetting factors, including targeted fiscal consolidation and improved market availability of key commodities, were noted.
Caretaker Finance Minister Dr Shamshad Akhtar remains optimistic, asserting that improved financial management will lead to a gradual reduction in inflation. The effective policies of the caretaker government, she stated, are contributing to improvements in the overall economic conditions.
