Karachi, The Consumer Price Index (CPI) for April 2024 has been reported at a 16.90% year-over-year increase, signaling a decrease from the previous month's rate of 20.68% YoY. This shift comes alongside a notable monthly decrease of 0.80%, with marked improvements in the food and housing sectors contributing to the downward revision in inflation estimates.
According to AKD Securities Limited, factors such as enhanced supply conditions and lower electricity cost adjustments have played significant roles in tempering inflationary pressures. Specifically, a reduction in Quarterly Tariff Adjustments (QTA) and Fuel Cost Adjustments (FCA) this April has resulted in a net negative impact of 9.1% on a monthly basis, contrasting sharply with the figures from March 2024. The research also highlights significant price drops in key food items like tomatoes, onions, potatoes, and fresh fruits, further easing the food index by 2.5% month-over-month.
Additionally, the report outlines expectations for core inflation rates, projecting an average of 16.5% in rural areas and 12.2% in urban settings for the fiscal year. These figures represent a decrease from the previous year's rates, which hovered around 24.7% and 18.3%, respectively. The overall inflation projection for the fiscal year remains elevated at 24.6%, although this is a decrease from previous forecasts.
The study also touches on monetary policy implications, suggesting that the recent disinflationary trends could pave the way for a potential easing of monetary policies in the coming quarters. This assessment aligns with the performance of other economic indicators like the current account deficit and external financing needs, which are reportedly within targeted limits despite ongoing risks related to currency fluctuations and inflation.
In conclusion, while the easing of inflation in April offers a hopeful outlook for fiscal stability, analysts from PBS and AKD Research advise caution due to possible disruptions from domestic and international economic factors. They predict that monetary policy adjustments could commence as early as the fourth quarter of FY24, contingent upon achieving targeted fiscal outcomes and managing upcoming adjustments in energy pricing.