Finance Ministry Anticipates Inflation to Remain High

Finance Ministry Anticipates Inflation to Remain High

The year-over-year (YoY) inflation rate has increased by more than 20% and may continue to be high in the near future, according to the Ministry of Finance on Thursday.

In its Monthly Economic Update & Outlook for July, the Economic Advisor’s Wing (EAW) of the Ministry of Finance warned that inflationary and external sector concerns are causing macroeconomic imbalances in the economy.

Various reports have claimed that the continuous political upheaval is raising economic unpredictability, which is leading to a decline in the value of the Pakistani Rupee (PKR) and having an effect on production costs. The economic picture is uncertain as a result of all these variables, it was said.

Since November 2021, the year-over-year (YoY) inflation rate has stayed double-digit. Due to the rise in global commodity prices, notably energy prices, and the depreciation of the PKR, inflation is predicted to continue to rise in July 2022 and remain close to the level seen in June 2022.

In June 2022, the Monthly Economic Indicator (MEI) is expected to continue sending out a good economic signal, in part because of the industrial sector’s sustained robust performance, which is known to have considerable multiplier effects on other economic sectors. 

The rise in commodities imported in June 2022 as a result of rising global commodity prices increased the trade imbalance. Remittances from workers were insufficient to cover the trade gap. The current account deficit expanded as a result.

However, it is anticipated that the government’s policy initiatives would reduce imports, and that improved performance from exports of goods and services and worker remittances will reduce the current account deficit in the upcoming months to a tolerable level.

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