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LAHORE: Pakistan has witnessed a gradual decline in inflation for the third consecutive month, marking its lowest rate in nearly two years, said renowned taxonomist Ashfaq Tola.

He said the monthly rate of inflation eased down to 20.7% in March 2024 on a Y-o-Y basis in Pakistan, drops to lowest level since May 2022, is now below key policy rate after over three years.

In the previous month (Feb 2024), he said, the CPI stood at 23.1%. However, he added, the aligning of currency parity with its true value of Rs235/USD could also help reduce the inflation rate to 3-4%. Additionally, he pointed out that Goldman Sachs has valued rupee parity at 225/USD. Consequently, policy rate further decline and which will reduce debt servicing by Rs2 trillion.

It may be noted that high inflation has hit a common man hard in the country due to multiple factors and Pakistan is trying to arrest it with the help of International Monetary Fund (IMF). The federal government is all set to enter into another IMF programme to get the economy out of mess.

Tola said the food inflation rate in urban and rural areas has dropped by nearly 16.6% and 17.1%, respectively, in March 2024. Also, the SBP has maintained the policy rate at 12% in the last monetary policy committee meeting held on March 18, 2024, to contain inflation. According to him, the average inflation in Jul-March period of FY24 reached 27.2%. In addition to that, he said, the wholesale price index (WPI) stood at 14.8% on a Y-o-Y basis, which was recorded 18.7% in the previous month. This would further increase the chances of reducing inflation in the coming months.

He said the national CPI has recorded a rise of 1.7% on a monthly basis. Similarly, the food inflation in urban and rural increased by 2.4% and 2.8%, respectively, compared to Feb 2024. Moreover, he said, in March 2024, the core inflation, which is calculated by excluding energy and food items, rose by 12.8% and 20.0% in urban and rural areas on a Y-o-Y basis, respectively.

Copyright Business Recorder, 2024

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