- JS Global provides that inflation will decrease to 2.8 %.
- Cites a high basic effect as a determining factor of the decline.
- It also provides a reduction in 100 base points at the political meeting.
Karachi: In the midst of the continuous efforts of the current administration to improve economic indicators, inflation in the country should continue its descending trajectory, potentially falling below 3 % in January, The news reported on Friday.
A report published by JS Global provides that inflation of the consumer price index (IPC) for January 2025 could fall to 2.8 %, marking the lowest level since November 2015, under the effect of A high basic effect despite a modest monthly increase of 0.6 %.
This would bring average inflation for the first seven months of the fiscal year to 6.7%, a significant drop compared to the 28.7% recorded during the same period of the previous year.
Ismail Iqbal Securities Limited echoes this point of view, projecting an inflation of 2.9 % in January, a sharp drop compared to the 28.3 % of the same month of last year, reflecting a significant release of pressures on prices.
In December 2024, overall inflation was 4.1 % over one year, compared to 4.9 % in November, according to the Pakistani Bureau of Statistics (PBS). The constant drop in inflation figures should encourage the central bank to further reduce its key rate.
JS Global anticipates a new drop in rates this month, although a lower reduction of 100 basic points compared to the strong drops observed above. Ismail Iqbal also expects a reduction in 100 base points at the next political meeting, followed by a prudent break or minor adjustments to monitor inflation trends.
Although the current inflationary environment is favorable, the two brokerage houses have warned that pressures could reappear from May 2025 as the basic effect decreases, potentially growing overall inflation.
The Pakistan State Bank (SBP) reduced its key rate of 200 base points last month to 13 %last month, a cumulative reduction of 900 base points since June on five consecutive monetary policy decisions.
These forecasts arise as inflation fell to 1.8 % over a year for the week ending on January 9 – the lowest since October 2014.
The drop in inflation has been largely attributed to a high basic effect, according to independent economists who have declared that even if the figures improve, the average consumer continues to feel the effects.