Hi Everyone! I hope you are all doing well. Welcome back to another blog. In this article, we will talk on the topic in detail “Government Anticipates Continuing High Inflation in the Upcoming Months”. Pakistan’s economy has been grappling with a significant challenge of inflation over the last few months. The rising prices of essential commodities and food items have put immense pressure on households’ budgets, leading to concerns about the overall economic situation. Despite the government’s efforts to curb inflation, it anticipates that the problem will persist in the coming months. This article delves into the reasons behind the high inflation and provides insights into the government’s response to the situation.
According to the Monthly Economic Update & Outlook for April released by the Economic Advisor’s Wing of the Ministry of Finance, the headline inflation in Pakistan is expected to remain high due to food and energy price hikes, currency depreciation, and rising administered prices. Despite the downward trend in global commodity prices, inflation is still on the rise, hovering around 36-38% for April 2023. The State Bank of Pakistan is following a contractionary monetary policy, but inflationary expectations have not settled down.
Furthermore, due to a slow recovery from flood-led damages, the supply of essential crops remains short of domestic requirements, leading to intensified inflation. To ease inflationary pressures, the federal government, in collaboration with provincial governments, is closely monitoring the demand-supply gap of essential items and taking necessary measures.
Pakistan’s economy is facing significant challenges, such as high inflation and a slowdown in economic activity. Some positive signals resulting from the government’s stabilization policies have been observed. The current account of the balance of payments has turned into a surplus. This may improve external financing constraints, promote exchange rate stability, and boost confidence in the economy.
The report mentions that during Kharif 2023, input availability will remain satisfactory. Inputs include seeds, agriculture credit, and fertilizers. The Pakistan Meteorological Department forecasts above-normal rains in the next three months. The rains will be particularly over the upper half of the country. A gradual rise in temperature may accelerate the snowmelt in the Northern Areas. However, lower parts of the country may remain slightly deficient during the Kharif season.
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