Friday May 17, 2024

‘November CPI expected to decline marginally’

By News Desk
November 30, 2022

ISLAMABAD: Pakistan’s November CPI is expected to decline marginally and may remain in the range of 23 percent-25 percent, the country’s finance ministry said in its monthly outlook on Tuesday.

CPI-based inflation clocked in at 26.6 percent in October. Persistently high inflation has put severe strain on the South Asian country's economy, which is also reeling from falling foreign exchange reserves, a depreciating and unstable currency, as well as a widening current account deficit.

Pakistan's central bank last week unexpectedly raised its key policy rate by 100 basis points to

16 percentto ensure high inflation does not get entrenched. The move brings the State Bank of Pakistan's (SBP) 2022 hikes to 625 basis points. It kept the rate unchanged at its last two meetings in October and September.

The South Asian country’s expenditure grew 26 percent in the first quarter of the financial year, the ministry said, adding that its fiscal deficit reached 1 percent of GDP in the same period. The outlook said inflationary pressure was expected to ease marginally month-on-month due to smooth domestic supplies, unchanged energy prices in November and a stable exchange rate.

The South Asian nation faces a huge economic challenge in the face of devastating floods, which are estimated to have caused more than $30 billion in losses.

The International Monetary Fund (IMF) wants Pakistan to cut expenditure as it conducts the ninth review of a $7 billion bailout programme. Pakistan and the IMF both have said this week that they have started online talks on the review.

The IMF in August approved the seventh and eights reviews of the bailout programme - agreed in 2019 - to allow the release of more than $1.1 billion. The ninth review has been pending since September.

The lender has said the finalisation of a floods recovery plan was essential to support discussions and continued financial support from multilateral and bilateral partners. Pakistan secured a $6 billion bailout in 2019, which was topped up with another $1 billion earlier this year.