ISLAMABAD: In recent months, Pakistan has witnessed a decline in its inflation rate, indicating a significant shift in its economic direction.
The inflation rate has demonstrated a significant decline, dropping from 29.7% in December 2023 to 20.7% in March 2024, reflecting a remarkable decrease of 9 percentage points within a concise three-month span.
Talking to media, Rafiullah Kakar, a member of the Development Project Committee at the Ministry of Planning, Development and Special Initiatives, emphasised that though commendable progress had been observed in curtailing inflation rate, it did not mitigate the enduring economic hurdles the country was facing. “Pakistan still remains confronted with inflation rates that exceed those of neighbouring South Asian nations, especially Bangladesh at 9.3% and India at 4.6%.”
He further said that a detailed analysis revealed that the reduction in inflation was primarily attributed to moderation in both food and non-food prices. “Notably, there has been a substantial decline in the inflation rate of staple items such as wheat flour, as well as imported goods like vegetable ghee, tea and pulses. This positive trend is further buoyed by stability in the value of the rupee, which has remained largely unchanged over the past year,” he pointed out.
“However, challenges loom on the horizon, casting a shadow of uncertainty over Pakistan’s economic trajectory. The success in curbing inflation hinges heavily on forthcoming policies and reforms, particularly those outlined in the new IMF programme. The stance towards the exchange rate of the rupee is of paramount importance, with questions arising about the sustainability of current policies in the face of IMF scrutiny,” Kakar noted.
Talking to media, Dr Eatzaz Ahmed, former memorial chairperson of State Bank of Pakistan, emphasised the increasing complexity of Pakistan’s inflation outlook. He pointed out that the potential rise in electricity and gas tariffs, along with global factors such as escalating oil prices, contributed to this complexity.
Ahmed highlighted the recent uptick in the price of Brent Crude per barrel as evidence of the volatility in global markets and its potential repercussions for domestic inflation rates.
“Looking ahead, there is a pressing need for proactive measures to ensure sustained economic stability and mitigate the adverse effects of inflation on living standards. The new government must prioritise comprehensive reforms aimed at achieving a more manageable inflation rate, ideally targeting a range of 12% to 14% by the beginning of 2025,” he said. –INP
