Last Updated on: 19th July 2023, 10:28 pm
Federal Govt Expects Inflation To Remain High in The Coming Months
The government said on Saturday that headline inflation (CPI) is expected to remain at elevated levels in the coming months.
The Treasury Department’s Economic Adviser Wing (EAW) pointed to rising food and energy prices as the main drivers of inflation in its April Monthly Economic Update and Outlook.
The report also points out that the devaluation of the currency and the increase in administered prices have contributed to the increase in the overall price level. Although global commodity prices are on a downtrend, they are still above pre-pandemic levels.
He said slow recovery from flood damage has meant supplies of key crops have lagged behind national needs, fueling inflation. Although the State Bank of Pakistan (SBP) is pursuing a tight monetary policy, inflation expectations are not abating.
Inflation is expected to remain in the 36-38% range through April 2023. according to the report. written down.
The report notes that during Kharif 2023, the availability of inputs in the form of seeds, farm credit, and fertilizers will remain satisfactory. As we have been informed by the Pakistan Meteorological Department (PMD) about the weather conditions, slightly above-average precipitation is expected in the next three months (April-June 2023), especially in the upper half of the country. Less rain is expected in June.
The temperature could remain slightly above normal in most of the country. A gradual rise in temperature will accelerate ice melting in the northern regions. Seasonal rains could provide water for crops in the main rainy areas, while low-lying parts of the country will remain slightly deficient during the kharif season.
According to the report, Pakistan’s economy still faces major challenges characterized by high inflation and slower economic activity. However, some positive signs are emerging as a result of the government’s stabilization policy. For example, the current account of the balance of payments made a surplus.
This could improve the containment of external financing, contribute to greater exchange rate stability and boost confidence in the economy. In addition, the successful completion of the International Monetary Fund (IMF) program will pave the way to attract more capital, further stabilize the exchange rate and ease inflationary pressures.
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