An economic expert has anticipated a gradual easing of inflation from January 2024 onwards. It is to be noted here that the Ministry of Finance's Monthly Economic Update and Outlook for December 2023 showed inflation ranged between 27.5% and 28.5%. Talking to WealthPK, Dr Eatzaz, Memorial Chairperson of the State Bank of Pakistan, expressed a positive perspective on inflation, foreseeing a gradual decrease from January 2024 onwards. He added that the anticipated improvement was attributed to various factors, including an enhanced supply situation, relief from imported inflationary pressures and the influence of a high-base effect. "The Ministry of Finance's forecast indicates a promising reduction of 24-25% in January 2024. This projection underscores the government's efforts to stabilise economic conditions amid ongoing challenges," he added. He highlighted several contributing factors to this positive trend. "Despite the upward revision of administered prices, particularly gas rates, the inflation outlook for the remaining months of FY24 remains moderate." Eatzaz continued that this moderation was attributed to a stable exchange rate, controlled aggregate demand, an improved supply position, moderation in international commodity prices, and a favourable base effect. "A noteworthy development is the recent drop in petrol and diesel prices.

This decrease is expected to counterbalance the inflationary pressure stemming from increased petrol prices. The ripple effect is substantial, impacting the average person through lower transportation and manufacturing expenses," he pointed out. "Adding to the relief, the provincial governments are taking proactive measures to lower public transport and freight tariffs by reducing fuel costs. These efforts are anticipated to further alleviate inflationary pressures, providing a breath of fresh air for the economy." The report delves into the global perspective, citing the Food and Agriculture Organisation's price index. The index, which tracks widely traded food commodities, maintained an average of 120.4 points in November 2023, unchanged from its revised October level. Notably, this stability comes despite price increases in vegetable oils, dairy products, and sugar, offset by decreases in cereals and meat. The index reflects a 14.4-point (10.7%) decrease compared to the same period last year. Eatzaz projected a positive trajectory for inflation in 2024, offering a glimmer of hope for economic stability. "As the government implements strategic measures and global factors align favourably, the stage is set for a gradual and welcome decline in inflation, paving the way for a more resilient economic landscape."

Credit: Independent News Pakistan (INP)