(Bloomberg) -- Pakistan’s inflation eased last month to the lowest in more than six years, providing space to the central bank to ease interest rates further.
Consumer prices rose 4.86% in November from a year ago, according to Pakistan Bureau of Statistics. That compares with a median estimate for a 5.1% gain in a Bloomberg survey and a 7.17% increase seen in October. This is the lowest reading since April 2018.
Cooling inflation will allow the central bank to continue loosening its monetary policy. State Bank of Pakistan has cut its benchmark rate by 700 basis points since June, taking its target rate to 15% last month. Economists in a separate Bloomberg survey forecast the key rate at 13.5% by the end of the current fiscal year ending June 2025.
Inflation may decline further in next few months due to contained demand and improved food supplies, the central bank had said. The International Monetary Fund projects consumer price gains to average 9.5% this year.
Prime Minister Shehbaz Sharif’s government has been facing public discontent over the nation’s economic conditions. But in the last few months its economy has stabilized as IMF’s $7 billion loan trickles in. Foreign exchange reserves have increased while import and currency restrictions that hurt industrial activity have eased.
Food costs eased 0.24% last month from a year ago, compared with 0.92% increase in October. While housing and energy costs jumped 7.89% in November compared with 19.2% increase in the previous month.
--With assistance from Khalid Qayum.
(Adds context in first and second paragraphs and details in last)
©2024 Bloomberg L.P.