Karachi, Karachi has recorded a Consumer Price Index (CPI) projection for April 2024 at 17.6%, indicating a shift towards a more favorable economic outlook with the potential for a positive real interest rate (RIR) expansion. This development comes as monthly inflation is expected to slightly decrease, influenced by lower food prices and despite increases in POL product costs and house rent adjustments. The forecast suggests a notable improvement in the country’s inflation dynamics, setting the stage for possible policy easing by the central bank.

According to JS Global, the decrease in food inflation by approximately 124 basis points month-over-month, coming off a high base from last month, is a key factor behind the projected improvement. The year-over-year food inflation is expected to reduce to 10.9%, a significant drop from the 28% average in the first nine months of FY 2024. Furthermore, core inflation, which excludes volatile food prices, is also predicted to decline to 15% from a previous average of 21%. This easing of inflation is occurring alongside an expansion of the positive RIR, from 133 basis points last month to an expected 443 basis points, creating a favorable environment for potential rate cuts despite ongoing uncertainties in the timing and size due to upcoming IMF negotiations and global oil price fluctuations.