Inflation expected to remain within 4-5% in December

Finance ministry expects continued economic stability, supported by strong remittances, export inflows, stable imports

Pakistan’s headline inflation is projected to remain in the 4-5% range for December 2024, according to the Finance Division’s latest economic update.

The Ministry of Finance highlighted that economic stability is expected to continue, supported by strong remittances, export inflows, and stable imports. This outlook is also bolstered by exchange rate stability and contained inflation, which has seen a significant reduction from its previous highs.

In November 2024, Pakistan's inflation dropped to 4.9%, its lowest level since May 2018, following a sharp decline from a record high of 38% in May 2023. The November figure marked a notable improvement from October 2024’s 7.2% inflation rate, signaling a positive economic trend.

The finance division remains optimistic that inflation will stay within the targeted range of 4.0-5.0% in December, thanks to continued stability in key economic indicators.

The reduction in inflation follows a series of measures by the State Bank of Pakistan (SBP), including a 200 basis point cut in the policy rate earlier in December, bringing it to 13%.

This reduction marks the continuation of an easing cycle that has seen the policy rate drop by a total of 900 basis points since June 2024. The easing of monetary policy is expected to stimulate economic activity further, contributing to improved production and higher economic output in the coming months.

Additionally, the finance ministry pointed to rising demand for credit, particularly from the private sector, as a positive signal of growing economic confidence.