Pakistan Expects Major Inflation Reduction From January
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Pakistan’s Consumer Price Index (CPI) inflation is projected to sharply decrease from January 2024 onwards, and the central bank is expected to reduce its key interest rate by 7 percent by the end of 2024, as per a brief note from Topline Securities on Friday.
The note stated, “We anticipate Pakistan CPI inflation to decline sharply from Jan 2024. Over the next 12 months (Nov 2023-Oct 2024), our average CPI estimate is 18.5%. We expect CPI to average 23% in FY24 and 15% in FY25, compared to 29% in FY23.”
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The note also referred to a recent IMF press release, which supported the idea that “Inflation is expected to decline over the coming months amid receding supply constraints and modest demand.” With clear indications of decreasing inflation, the note predicts that the State Bank of Pakistan (SBP) policy rate will decrease by 7% in 2024, reaching 15% by December 2024, compared to the current rate of 22%.
We believe Pakistan CPI inflation to fall sharply from Jan 2024. Over next 12 months (Nov 2023-Oct 2024) our average CPI estimate is 18.5%. We expect CPI to average at 23% in FY24 and 15% in FY25 compared to 29% in FY23. Recent IMF press release also endorsed that “Inflation is… pic.twitter.com/OyI94W553F
— Topline Securities (@toplinesec) November 24, 2023
It’s worth noting that CPI inflation rose to 26.9 percent on a year-on-year basis in October 2023. Inflation eased in October due to authorities reducing fuel prices and cracking down on illegal forex trade during that period.
