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October inflation eases to 23.8% in Pakistan

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  • Inflation number is in line with Ministry of Finance’s outlook.
  • On a monthly basis, inflation moderates to 0.8% in November.
  • Going forward, economist expects inflation to come down further.

ISLAMABAD: The inflation rate eased to 23.8% last month compared to October’s record high inflation of 26.6% in line with the Ministry of Finance’s monthly outlook as the high base effect kicked in.

The latest inflation bulletin from the Pakistan Bureau of Statistics (PBS) also showed that the pace of price hikes also slowed down to 21.6% and 27.2% in urban and rural areas; however, the constant double-digit inflation in the country has adversely affected people’s purchasing power.

On a month-on-month basis, inflation moderated to 0.8% in November, compared to a whopping increase of 4% in the previous month and 3% in November 2021.

Economist Sana Tawfiq, while speaking to Geo.tv, cited a lower jump in food prices as a significant reason behind this month-on-month decline.

“Reasons for month-on-month moderation was lower jump in food prices with food index up meagre 0.1%, also transportation was down 0.1%.

“On the contrary; housing, clothing and household equipment indices were up monthly basis mostly showing a jump in winter-related items such as woollen garments and dry fruits,” she added.

The Ministry of Finance in its monthly outlook report had mentioned that inflationary pressure was expected to ease marginally in November due to smooth domestic supplies, unchanged energy prices and a stable exchange rate.

The prices of both non-perishable increased last month. The food group prices surged nearly 28.92% in November in comparison with the same month a year ago. The PBS data, however, showed that the prices of perishable food items decreased by 0.27%.

On a year-on-year basis, the pace of food inflation eased to 29.7% in cities and declined to 33.5% in villages and towns last month, according to PBS.

Non-food inflation dropped to 16.4% in urban areas and 21.4% in rural areas compared to the same month last year, according to the national data collecting agency.

Core inflation — calculated after excluding food and energy goods — eased to 14.6% in urban areas. However, it increased to 18.5% in rural areas. Tawfiq expressed concern over elevated core inflation as the economist believes higher core inflation is “alarming”.

“We expect headline inflation to come down further going forward, supported by high base,” Tawfiq predicted.

Price of essential kitchen items 

The prices of onions — an essential vegetable used in all households — were higher by over 34% last month compared to September, followed by a 14.79% increase in the rates of tea, and nearly 14.5% in various the price of potatoes and dry fruits, according to the PBS.

However, the prices of vegetables decreased in a range of 10-30%, chicken by 5.08%, and rates of various pulses by over 5%, according to PBS.

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Moody’s says the IMF programme will increase Pakistan’s foreign financing.

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Moody’s, a reputable international rating agency, has stated that Pakistan’s chances of acquiring funding will increase as a result of the recent agreement with the International Monetary Fund (IMF), which offers dependable sources for that purpose from both friendly countries and international financial institutions.

According to a recent Moody’s analysis on Pakistan’s economy, social unrest and tensions could result from Pakistan’s ongoing inflation. The country’s economic reforms may be hampered by increased taxes and potential changes to the energy tariff, it continued.

Moody’s, on the other hand, agrees that the coalition government headed by Shehbaz Sharif of the PML-N is in danger of failing to secure an election mandate, which may potentially undermine the successful and long-lasting execution of economic reforms.

The government’s capacity to proceed with economic changes may be hampered by societal unrest and poor governance, according to Moody’s.

In order to appease the IMF by fulfilling a prerequisite for authorising a rescue package, the government raised the basic tariff on electricity, which coincided with the most recent increase in fuel prices announced on Monday. This report was released by Moody’s.

Food costs have increased in the nation, where the vast majority is experiencing an unprecedented crisis due to the high cost of living, following the government’s earlier presentation of a budget that included a large increase in income tax for the salaried classes and the implementation of GST on commodities like milk.

The most recent comments were made following Islamabad’s achievement of a staff-level agreement for a $7 billion contract that spans 37 months and is contingent upon final approval by the IMF Executive Board.

It states that Pakistan will need foreign financing totaling about $21 billion in 2024–2025 and $23 billion in 2025–2026, meaning that the country’s present $9.4 billion in reserves won’t be sufficient to cover its needs.

Therefore, according to Moody’s, Pakistan is in an alarming position with regard to its external debt, and the next three to five years will be extremely difficult for the formulation and implementation of policies.

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Base Of bilateral relations: China And Pakistan Reiterate Their Support For CPEC

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China-Pakistan economic corridor is a major project of the Belt and Road Initiative, and both countries have reiterated their commitment to it. It remains a fundamental aspect of their bilateral relations.

Vice Chairman Zhao Chenxin of the National Development and Reform Commission of China and Minister Ahsan Iqbal of Planning and Development met in Beijing, where Ahsan Iqbal made this assurance.

The summit made clear how committed China and Pakistan are to advancing their strategic cooperative partnership in all weather conditions.

The focus of the discussion was on how the CPEC was going, with both parties reviewing project development and discussing how the agreement made at the leadership level will lead to the launch of an enhanced version of the CPEC.

In order to improve trade, connectivity, and socioeconomic growth in the area, they emphasised the need of CPEC projects.

The Ml-I Project, the KKH realignment, and the Sukkur-Hyderabad motorway—the last remaining segment of the Karachi-Peshawar motorway network—were all to be expedited.

Expanding the partnership’s horizons to include technology, innovation, education, connectivity, and renewable energy sources was another topic of discussion.

Specifically in the special economic zones being built under the Comprehensive Economic Cooperation (CPEX), Vice Chairman NDRC emphasised the possibility of China investing more in Pakistan.

In addition to expressing confidence in the ongoing success of the two nations’ collaboration, Zhao Chenxin reiterated China’s support for Pakistan’s development aspirations.

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Pakistani government raises petrol prices

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A recent announcement states that the price of petrol has increased by Rs 9.99 per litre, to Rs 275.60 per litre.

The cost of high-speed diesel has also increased significantly, rising by Rs 6.18 a litre. Diesel is now priced at Rs 283.63 a litre.

Furthermore, kerosene now costs Rs 0.83 more per gallon.

The cost of products and services is predicted to rise in response to the increase in petroleum prices, further taxing household budgets and jeopardizing the stability of the economy.

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