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Pakistan’s December 2023 Inflation Rate Expected to Marginally Slow to 28.6%

Karachi, The Consumer Price Index (CPI) for December 2023 in Pakistan is expected to show a marginal slowdown to 28.6% on a year-over-year basis, recent forecasts. This deceleration trend is anticipated to continue, supported by a decrease in fuel prices and controlled food costs.

According to JS Global, the month-over-month CPI movement for December 2023 is projected to be nearly flat, leading to this slight decrease in the annual inflation rate. The expected decline in fuel prices and stabilization of food prices are likely to offset inflationary pressures in other areas. Looking ahead, an approximate 82 basis points (bp) month-over-month CPI trend is predicted, bringing the calendar year 2024 (CY24) average CPI to around 16%, compared to a Policy Rate of 22%. Notably, March 2024 is projected to be the first month with a positive real interest rate scenario, with CPI forecasted at 19%.

The report also notes potential risks to the inflation forecast due to developments around the Red Sea routes, which could lead to higher oil prices. However, some relief is expected from recently tamed food inflation.

These projections indicate a gradual easing of the inflationary environment in Pakistan, albeit with certain external factors posing risks to the stability of this trend. The expected reduction in the inflation rate could have implications for monetary policy and the overall economic outlook for the country.

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