The government on Wednesday said the pace of inflation would slow down to 27% this month but linked achieving the new fiscal year’s targeted growth of 3.5% with political and economic certainty.
The inflation for July 2023 is expected to remain between 25% and 27%, the finance ministry reported in its first monthly economic outlook for the fiscal year 2023-24.
It added that inflation in July 2023 was expected to reduce compared to its previous month, which was over 29%.
The document read that the recent decrease in the administered prices of petrol and diesel would be transmitted into lower domestic prices of essential items by impacting the transportation cost.
The finance ministry’s forecast is in line with independent assessments.
According to KASB Research, inflation is estimated to register at 26.8% in July against 29.4% recorded in the preceding month.
However, it noted that the inflation index was estimated to rise by 2.2% every month because of higher food prices.
KASB Research continued that although the inflation rate was slowing down, Pakistan’s steps, including increased taxation and higher energy tariffs, would keep it on a higher trajectory.
The finance ministry also maintained that the declining international commodity prices were expected to offset the inflation spikes that emerged because of the domestic supply shocks.
The benchmark index of international food commodity prices declined again in June 2023 – led by a decrease in the rates of significant cereals and most vegetable oils.
The ministry hoped the government would achieve the fiscal year’s annual economic growth target of 3.5%.
However, it added that achieving higher and sustainable growth would require prudent and effective economic decisions and political and financial certainty.
