The government, attributing the easing of inflationary pressures to robust agricultural output, lower fuel prices, and the high base effect of last year, pledged strong commitment to strengthening public finances through reforms and initiatives in the upcoming budget. This will be supported by the next three-year IMF bailout program.
According to the Ministry of Finance’s monthly Economic Update & Outlook for May 2024, inflation is expected to remain within the range of 13.5-14.5% for May 2024, with gradual easing anticipated to 12.5-13.5% by June 2024. The CPI inflation in April stood at 17.3% year-on-year, compared to 36.4% in April 2023, with major drivers being housing, utilities, perishable food items, clothing, footwear, and transportation.
The government credited stringent administration measures for the declining inflationary trend, particularly in bolstering the availability of food items and reducing transportation costs through lower fuel prices. The report highlighted positive economic indicators, including GDP growth, declining inflation rates, and a positive primary balance, reflecting fiscal consolidation efforts.
Agriculture emerged as a major contributor to economic growth, supported by government-led initiatives to enhance input supply and credit disbursements. Despite challenges in the expenditure sector, prudent management strategies restricted the growth in non-markup current spending. The report also expressed optimism for stable commodity prices and favorable agricultural outcomes due to targeted subsidies and incentives offered by both federal and provincial governments.
The forecast of above-normal precipitation by the Pakistan Meteorological Department further raised hopes for improved agricultural performance.
