ISLAMABAD: The Ministry of Finance said on Tuesday that inflationary pressure is expected to marginally ease out month-on-month due to smooth domestic supplies, unchanged energy prices in November and a stable exchange rate.

Further, the recent Kissan package has made an optimistic crop outlook which will decelerate food inflation in the months ahead.

Moreover, the food supply chain disruption caused by flash floods is also settling down which has smoothened the food and other related markets, the ministry said in its economic update and outlook for November.

Thus, food inflation is also expected to remain on the lower side because the administered prices are maintained restricting the pass-through of energy-led inflation. Though international commodity prices are showing an upward trend on a year-on-year basis and Pakistan being a net importer may be affected by it.

However, the stable exchange rate and the government’s administrative policy and relief measures are providing a cushion to absorb its impact. It is expected that CPI inflation will marginally decline in November and may remain in the range of 23-25 per cent, the ministry hoped.

On the sectoral side, the delayed sowing of wheat crop in Sindh is making it challenging to achieve the targets set for Rabi 2022-23. However, the supporting measures by both federal and provincial governments may reverse the negative effects on the agriculture sector.

For October, the Large-Scale Manufacturing (LSM) is expected to show moderate positive growth both on YoY and MoM basis if no adverse shock is observed. But shocks emanating from the floods and the energy crises represent downside risks.

Published in Dawn, November 30th, 2022

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