"Pakistan's Inflation Rate Drops to 17.3% in April, Marking the Lowest in Almost Two Years"

 "Inflation Eases in Pakistan: Lowest in Nearly Two Years"

Pakistan has been grappling with soaring inflation rates since May 2022, reaching a staggering 38% in May 2023 amid reforms tied to an International Monetary Fund (IMF) bailout program. However, recent data from the statistics office indicates a significant shift in the economic landscape, with Pakistan’s consumer price inflation dropping to 17.3% in April, marking the lowest reading in almost two years and falling below the finance ministry’s expectations.

The decline in inflationary pressures is notable, especially considering the persistent inflation above 20% that has plagued the country for nearly two years. This downward trajectory is further emphasized by a month-on-month decrease of 0.4%, pushing into negative territory for the first time since June 2023.

According to Pakistan’s finance ministry, this downward trend is expected to persist, with projections indicating inflation hovering between 18.5% and 19.5% in April, followed by further easing to 17.5%-18.5% in May.

Faizan Kamran, CEO of FRIM Ventures, a Karachi-based investment and research company, attributes this deceleration primarily to a significant slowdown in food inflation. Kamran further predicts a continued decline, with inflation possibly reaching single digits within the next five to six months.

The recent decision by Pakistan’s central bank to maintain its key interest rate at 22% underscores its commitment to curbing inflationary pressures. This decision coincided with the approval by the IMF executive board of $1.1 billion in funding under a $3 billion standby arrangement signed the previous year. In an IMF statement following the approval, it was noted that while inflation remains elevated, it is on a downward trajectory and is anticipated to reach around 20% by the end of June, provided that appropriately tight, data-driven monetary policy is maintained.

The monetary policy committee of Pakistan's central bank has deemed it "prudent" to persist with its current monetary policy stance to bring inflation down to the target range. This decision marks the seventh consecutive policy meeting where the rate has remained unchanged.

Antoinette Sayeh, Deputy Managing Director and Chair at the IMF, emphasized the importance of Pakistan's central bank maintaining its tight monetary policy stance until inflation returns to more moderate levels.

Looking ahead, Pakistan plans to approach the IMF for a longer-term program by early July, following the completion of its nine-month standby arrangement earlier in the week. This move reflects the country's ongoing commitment to navigating economic challenges while fostering sustainable growth and stability.