Islamabad December 4 2023: Pakistan Inflation may fall to below 26 percent in December 2023 on lower food prices, says Ministry of Finance.
The Food and Agriculture Organization's food price index, which tracks the most globally traded food commodities, averaged 120.6 points in October, 2023 down from 121.3 in the previous month showing a decline of 0.7 points. The October reading was the lowest since March 2021.
Domestically, the high base effect would provide a little solace to inflation growth in the upcoming months. The spike witnessed in weekly SPI recorded on 16 November, 2023 is primarily contributed by increase in Gas charges (up to 3.3719 MMBTU) WoW and YoY at 480 percent and 1109 percent, respectively. However, this increase in gas prices will not impact CPI to much extent.
National CPI inflation comprises Urban and Rural baskets. Gas charges are included only in the Urban CPI basket with a weight of 1.0807. So, the increase in gas prices will have a limited impact on the national CPI inflation as compared to the weekly SPI. Keeping in consideration, the crop cycle of perishables, the supply pressures are expected to be relieved by end November onwards.
Moreover, the reduction of fuel prices by the government would help further easing out inflationary pressures. In view of the above, inflation is anticipated to remain low and expected to further ease out to 25.5-26.5 percent in December 2023.
However, the inflation reading for the month of November 2023 is higher than the ministry of finance estimates of 26.5 percent to 27.5 percent.