Finance ministry reports CPI inflation heading towards single digit
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Finance Minister informs export-led growth was necessary to avoid another BoP crisis
ISLAMABAD (Web Desk) - The Finance Ministry on Tuesday reported its monthly outlook for July stating that the Consumer Price Index (CPI) inflation was heading towards single digits.
The CPI measures household inflation and includes statistics about price change for categories of household expenditure.
The Pakistan Bureau of Statistics reported CPI inflation reached 12.6pc in June. Although the reading is higher than the 11.8pc year-on-year rise in May 2024, it eased from a historic high of 38pc in May 2023.
“In June 2024, CPI inflation reached the cusp of the single-digit range,” the report said, highlighting it was recorded at 12.6 per cent year-on-year (YoY) in June 2024, compared to 11.8pc in the previous month and 29.4pc in June 2023.
The report also said that the economy was moving towards stability in the fiscal year 2024 “with decreasing inflation, a surplus in the primary fiscal account (July-May), a negligible current account deficit, and a stable exchange rate”.
The external account position improved due to contained imports resulting from prudent fiscal and monetary management, while exports and remittances increased significantly, it explained.
The report said the government’s recent $7 billion extended fund facility with the International Monetary Fund (IMF) would further “strengthen stability”.
Finance Minister Muhammad Aurangzeb on Tuesday informed export-led growth was necessary to avoid another balance of payment crisis.
Addressing industrialists in Karachi, the finance minister said, “Three years ago, we saw that [what happens] when you press the lever of growth with just imports increasing. Within four months, we ran out of dollars and we had to go on our knees to the Fund.”
The finance minister said, drawing from his experience as a banker, that the issues of currency stability and foreign reserves stand in the way of the private sector. He, however, added that it was more necessary to develop export-led growth.
About the interest rate cut, the finance minister shared he remained hopeful for further cuts, adding that it was the State Bank of Pakistan (SBP)’s prerogative and that in his personal opinion, it was “a step in the right direction”.
However, he said that the government could “only do so much with the fiscal space available”.
When there’s permanence in macroeconomic stability, the country could go towards growth, he concluded.
