Pakistan saw a sharp decline in inflation during November, with consumer prices recording only 4.86% (below the estimate of 5.1%) compared to the previous year, the lowest level since April 2018, according to a report published by Bloomberg.
The report explained that this significant decrease was better than expectations, which estimated an increase of 5.1%, and also less than the 7.17% rate recorded in October, and in the details of the numbers, the report showed that:
- Food prices: decreased by 0.24% in November compared to an increase of 0.92% in October.
- Housing and Energy: witnessed an increase of 7.89% compared to 19.2% in the previous month.
The decline in inflation rates provides space for the central bank to continue cutting interest rates, which have already fallen by 700 basis points since June, bringing the benchmark interest rate to 15% last month.
According to another Bloomberg survey, economists expect the interest rate to reach 13.5% by the end of the current fiscal year in June 2025.
The central bank indicated that inflation may continue to decline in the coming months as a result of lower demand and improved food supplies. While the International Monetary Fund expects inflation to average 9.5% this year.
The economic situation improved
Despite the difficult economic conditions faced by the government of Prime Minister Shehbaz Sharif, Bloomberg indicates that the Pakistani economy has witnessed improvement in recent months.
With the influx of a $7 billion IMF loan, foreign exchange reserves increased, and the restrictions imposed on imports and currencies that had negatively affected industrial activity were reduced.
This improvement in inflation rates gives hope for the recovery of the Pakistani economy, and reduces pressure on families suffering from high costs of living, according to the agency.
