Hoping IMF deal to work for it, Pakistan braces for 12-13% inflation in July & August

Pakistan’s finance ministry expects inflation in July to range between 12 per cent and 13 per cent, easing further in August to stand between 11 per cent and 12 per cent, it said in a monthly economic outlook released on Tuesday.

Inflation figures likely to be released on Thursday by the statistics agency are closely watched by the central bank, which cut rates this week for the second time in a row as previously surging inflation was tempered.

The government had also cut the fiscal deficit to 4.9 per cent of GDP between July 2023 and May 2024, the ministry said in its report, down from 5.5 per cent last year.

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Pakistan struck a deal this month with the International Monetary Fund (IMF) for a $7-billion-loan programme that includes tough measures such as higher tax on farm incomes and electricity prices.

This prospect has aroused concern among poor and middle class Pakistanis contending with the threat of further inflation and higher taxes.

Inflation has slowed in recent months after hitting more than 30 per cent in 2023. Pakistan’s consumer price index (CPI) rose 12.6 per cent in June on the year.

But pressure continues and one Islamist party has held protests in recent days and threatened sit-ins in major cities if the government does not tackle rising prices.

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