Inflation Rate Remains Stable in Pakistan
The inflation rate in Pakistan has remained stable at 6.1% for the second consecutive month. According to the Pakistan Bureau of Statistics (PBS), the headline inflation rate remained the same in November compared to the previous year. However, the underlying inflationary pressure has receded, indicating no buildup of price pressure last month.
Deceleration of Non-Food, Non-Energy Inflation
The monthly inflation and non-food, non-energy inflation have decelerated, which is a positive sign. The core inflation, calculated after excluding food and energy items, has significantly slowed down. In urban areas, core inflation slowed down to 6.6% compared to 7.5% in the previous month. Similarly, in rural areas, core inflation eased to 8.2% compared to 8.4% in the previous month.
Calls to Reduce Interest Rates
Despite the stable inflation rate, economists are calling for a reduction in interest rates. The central bank has kept the interest rate unchanged at 11%, which is far higher than the headline inflation. The business community and Prime Minister Shehbaz Sharif have also demanded a reduction in interest rates to single digits. Lt General Sarfraz Ahmad, National Coordinator of the Special Investment Facilitation Council, stated that the interest rate must be reduced to reflect the ground reality.
Economic Outlook
The Ministry of Finance has reported that Pakistan’s economic outlook remains cautiously optimistic, with industrial activity continuing to strengthen amid implementation of economic reforms. However, inflation is expected to remain in the range of 5% to 6% due to pressures on food prices and agricultural output. The World Bank has revised upwards its inflation forecast for Pakistan to 7.2% for the current fiscal year.
Impact on Economy and People
The constant price pressure has eroded the purchasing power of households, and the economy has been struggling to create enough jobs for new entrants. As a result, there has been a significant increase in the number of people going abroad in search of jobs. According to the Ministry of Finance’s monthly report, about 90,339 workers left Pakistan in October this year alone, which is a 22.8% increase compared to September.
Conclusion
In conclusion, while the inflation rate remains stable, the underlying inflationary pressure has receded, indicating no buildup of price pressure. The deceleration of non-food, non-energy inflation and core inflation is a positive sign. However, the constant price pressure and lack of job creation continue to affect the economy and people. It is essential for the government and central bank to take measures to reduce interest rates, manage supply chains, and maintain fiscal discipline to ensure price stability and economic growth.
