ISLAMABAD: The Ministry of Finance on Wednesday said the inflation had decelerated but would remain elevated at 25-27 per cent in July — the first month of 2023-24.

“The inflation for July is expected to remain in the range of 25-27pc,” said the Economic Advisors’ Wing of the Ministry of Finance in its monthly economic update and outlook.

It said the inflation measured by Consumer Price Index (CPI) was recorded at 29.4pc in June as compared to 21.3pc in June 2022 whereas it increased to 38pc in the preceding month and average CPI inflation for FY23 stood at 29.2pc compared to 12.2pc in FY22.

It said the inflation in July was expected to ease out month-on-month as the recent decrease in administered prices of petrol and diesel will be transmitted into lower domestic prices of essential items by impacting the transportation cost.

Moreover, the declining international commodity prices are expected to offset the inflation spikes that emerged due to domestic supply shocks. The benchmark index of international food commodity prices declined again in June led by decreases for major cereals and most types of vegetable oils.

It said the government support to the agriculture sector through Kissan Package was expected to result in a better crop outlook and smoothen the domestic supplies while the “expected political stability and the stable exchange rate would help to achieve price stability”.

Also, the input situation is expected to remain favourable during the period except for weather conditions.

The outlook said the large-scale manufacturing cycle usually followed the cyclical move­ments in the main trading partners, but since it is focused on the main industrial sectors and not on total GDP, it is somewhat more volatile than the cyclical component of GDP in Pakistan’s main export markets.

Published in Dawn, July 27th, 2023