It is promising to see a downward trend in inflation. According to the latest economic update from the finance ministry, inflation is projected to decrease from the current 13.5-14.5% to 12.5-13.5% by June. This is a significant improvement, considering the country has been grappling with inflation rates above 20% since May 2022, reaching a staggering 38% in May 2023.
The recent slowdown in inflation — the consumer price index for April dropped to 17.3% from 19.4% a year earlier — is a positive development. This marks the lowest reading in nearly two years and is below the finance ministry’s projections for the month. The report attributes this decrease to improved domestic supply chains for perishable items and staple foods like wheat, as well as a reduction in transportation costs.
Looking ahead, the outlook for May 2024 continues to show a downward trajectory for inflation. This can be attributed to the elevated inflation levels of the previous year and improvements in the domestic supply chain. Additionally, favourable external and domestic economic conditions are expected to contribute to the economy gaining momentum.
It appears the government’s efforts to address inflation and stabilise the economy, while remaining in compliance with the IMF’s bailout programme, seem to be yielding positive results. However, it is crucial to maintain this momentum and implement policies supporting sustainable economic growth and price stability. Policymakers must remain vigilant and proactive in addressing any potential challenges that may arise. Sustained efforts to bolster the domestic supply chain, manage external factors and promote a conducive economic environment will be key in ensuring that inflation continues on a downward trajectory.
A few more months of positive economic data will be exactly the kind of shot in the arm the country needs to restore consumer and investor confidence. The road to economic stability and sustainable growth is long, but decreasing inflation is certainly a step in the right direction.
Published in The Express Tribune, May 31st, 2024.
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