Inflation is expected to slow to 5.8-6.8 per cent in November, and then further to 5.6-6.5pc in December, the finance ministry said in its monthly economic report on Wednesday.

The government slashed interest rates by 250 basis points earlier in November in a bid to revive a sluggish economy amid a big drop in the rate of inflation.

Inflation clocked in at 7.2pc in October, a sharp drop from a multi-decade high of nearly 40pc in May 2023.

The report said that the consumer price index stood at 8.7pc from July-October against 28.5pc recorded in the same period last year.

Meanwhile, year-on-year (YoY) Inflation was recorded at 7.2pc in October 2024, compared to 6.9pc in the previous month and significantly lower than 26.8pc recorded in October 2023.

It said the significant contributors to inflation included perishable food items (15.9pc), housing, water, electricity, gas and fuels (19.2pc), clothing and footwear (14.6pc), health (12.3pc), restaurants and hotels (7.9pc), alcoholic beverage and tobacco (6.4pc) and furnishing and household equipment maintenance (5.9pc), while transport observed a decline of 6.1pc and non-perishable food items decreased by 1.5pc.

In its economic outlook, the report said the real sector of the economy continued to get support from agriculture and industrial sector policies.

“On the agriculture front, wheat crop sowing is in progress to achieve the targeted area and production. The government facilitations are well intact regarding the timely provision of key inputs to the farmers at reasonable prices.

“Meanwhile, large scale manufacturing indicators highlight a sector striving to recover. Although YoY growth remains negative, month-on-month performance shows signs of resilience, with gradual production increases in key sectors such as textile and automobiles. Continued policy support and external stability provide a foundation for sustained improvement, suggesting a cautiously optimistic outlook for progressive recovery.”

The report said that fiscal consolidation and contained inflation would provide impetus to economic activities in the coming months.

Regarding exports and the current account, it said: “The current account turned into a surplus during Jul-Oct FY2025, bolstering external sector sustainability. For the outlook, it is anticipated that exports, imports and worker’s remittances will continue to observe their increasing trend — exports will remain within a range of $2.5-3 billion, imports $4.5-4.9bn and worker’s remittances $2.8-3.3bn in November 2024.”