Consumer Price Index (CPI)-based inflation in Pakistan for October has been projected at 27%-29%, the finance ministry said in its monthly economic report on Tuesday.

In its latest ‘Monthly Economic Update and Outlook’ report, the finance ministry anticipated inflation will be lower contained compared to the elevated levels observed in the first quarter of FY2024.

The development comes on account of several factors including stability in international food price trends, as reported by the FAO (Food and Agriculture Organization).

“While certain food categories, like vegetable oils, dairy and meat prices witnessed decline, while others, including sugar and cereals, recorded increase.

“However, these fluctuations balanced out, resulting in an overall index value of 121.5 points, nearly identical to August 2023,” said the report.

On the domestic front, the interim government’s decision to reduce petrol and diesel prices consecutively in two instances, amid a decline in international markets and a stronger domestic currency, is expected to mitigate the inflationary pressures in the country, noted the report.

“Moreover, the subsequent efforts of the subnational governments to implement lower fares of local public and freight transportation, in line with the reduced fuel prices, would further relieve stress on consumer prices,” the Ministry of Finance report said.

The inflation reading clocked in at 31.4% on a year-on-year basis in September 2023, as compared to an increase of 27.4 % in the previous month and 23.2% in September 2022, according to the Pakistan Bureau of Statistics (PBS).

The report added that exports of goods and services for October will remain around $3 billion, similar to what was observed in September.

It will “gradually take its increasing momentum in the coming months as LSM shows some turning point and posted growth of 8.4% in August on a monthly basis,” said the Ministry of Finance.

Imports, however, are showing some fluctuations on a monthly basis, and are expected to remain in a range of $4-4.5 billion in October, as the rupee continues to gain against the US dollar, the report said.

“Taking all these factors into account and with a positive outlook for remittances, the current account will continue to observe its improved monthly trend,” it said.