Karachi, Pakistan's Consumer Price Index (CPI) is anticipated to register at 20.3% for March 2024, reflecting a notable increase due to escalating food prices, particularly with the onset of Ramadan. JS Global projects a sharp month-over-month inflation rise, attributing it significantly to food costs amidst other incremental price hikes across various sectors.

According to JS Global, the forecast for March 2024 suggests a significant uptick in food inflation by almost 300 basis points month-over-month, marking the most considerable rise since July 2023. Despite this, a high base effect is expected to bring year-over-year food inflation down to 17.3%, contrasting with an 8-month FY24 average of 29.6%. Core inflation, which excludes volatile food and energy prices, is also predicted to decelerate to 17.2%, reflecting an overall easing trend against the prior fiscal period's average.

The analysis indicates that, while year-over-year headline inflation is projected to hit a 22-month low, the context of an upcoming new IMF program and associated reforms could introduce further inflationary pressures. The financial community is closely monitoring the evolving situation, particularly as secondary market yields have shown significant movement, signaling shifting market expectations regarding the country's monetary policy direction.

JS Global's report underscores the critical balance between necessary economic reforms and their inflationary consequences, especially in light of potential policy shifts and external program engagements. The focus on automating the Federal Board of Revenue (FBR) is highlighted as a strategic measure to enhance efficiency and revenue collection, pivotal for Pakistan's fiscal consolidation efforts.

As the country grapples with economic challenges, the evolving dynamics of its inflationary trends and policy responses will be crucial in shaping the broader economic landscape, particularly in ensuring sustainable growth and macroeconomic stability.