Pakistan's Inflation Rate Slows to 17.3% in April
Pakistan's consumer price inflation slowed to 17.3% in April 2024, marking the lowest reading in nearly two years and falling below the finance ministry's projections. This signifies a positive development for the country, which has been grappling with inflation exceeding 20% since May 2022.
The inflation rate peaked at 38% in May 2023, coinciding with the implementation of reforms associated with an International Monetary Fund (IMF) bailout program. However, recent data indicates a promising downward trend. Month-on-month inflation even dipped into negative territory for the first time since June 2023, registering a decline of 0.4%.
Analysts attribute this encouraging trend primarily to a slowdown in food inflation. Faizan Kamran, CEO of FRIM Ventures, anticipates further decline, projecting that inflation could fall into single digits within the next five to six months.
The positive developments come amidst the backdrop of the IMF approving $1.1 billion in funding for Pakistan under a $3 billion standby arrangement. The IMF acknowledges the ongoing decline in inflation and expects it to reach around 20% by the end of June, provided that the central bank maintains its tight monetary policy stance.
The central bank has kept its key interest rate unchanged at 22% since Monday, aiming to curb inflation. The bank's monetary policy committee emphasizes the importance of maintaining this stance until inflation returns to more moderate levels.
With the completion of its nine-month standby arrangement earlier this week, Pakistan plans to approach the IMF again in early July for a longer-term program. The country's economic outlook appears to be improving, with inflation showing signs of sustained decline and continued support from the IMF.