A recent report by a local economic research institute has indicated a positive trend in Pakistan’s economic landscape, with a projected decline in the inflation rate.
Topline Research predicts that the inflation rate for the current month will likely range between 4.5% and 5%. It predicts that inflation rate will fall below 5% after 78 months.
This marks a significant improvement compared to the previous year, where the average inflation rate during the first five months was a staggering 28.62%. Topline Research forecasts that the average inflation rate for the first five months of this year will be around 7.91%. While this is still higher than the ideal rate, it represents a substantial reduction from the previous year.
The report highlights that food inflation is expected to increase by 0.2% monthly, driven primarily by rising prices of eggs, daal moong, tomatoes, and potatoes by 5.35%. Additionally, charges in the housing, water, electricity, and gas sectors are projected to increase by 0.11% monthly, primarily due to a 7% monthly increase in LPG prices. However, a decline in electricity prices is anticipated due to negative fuel price adjustments.
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The report said that the transport sector is expected to witness a 1.4% monthly increase, primarily attributed to rising petrol and diesel prices.
The research institute predicts that interest rates will likely range between 11% and 12% by December 2025. The inflation rate for the financial year 2024-25 is estimated to be between 7% and 8%. It's important to note that these projections could be influenced by significant changes in global commodity prices.
While the downward trend in inflation is encouraging, challenges persist. The IMF has revised its inflation forecast for Pakistan downward from 12.7% to 9.5%, but the central bank's projection in its recent monetary policy remains higher, at 11.5% to 13.5%.
The report says that inflation estimates may change in the event of a major change in commodity prices.
