LAUDING a record drop in inflation to 4.9% after almost six-and-a-half years, Prime Minister Shehbaz Sharif has described the phenomenon as ‘beyond imagination’. Addressing a meeting of the Federal Cabinet, he sounded optimistic about further relaxation in key policy rate by the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) in its next meeting.
The satisfaction of the Prime Minister is understandable as beating official forecasts, Pakistan’s inflation slowed to 4.9% year-on-year in November 2024, down from 7.2% in October, marking its lowest level in six-and-a-half years. A few months back, record-breaking inflation had become the number one concern of the people of Pakistan. We have been maintaining in these columns that inflation has much to do with the overall policies of the government and its lack of administrative control over artificial rise in prices. The situation has improved because of a combination of a number of factors. The exchange rate has been stable for the last several months, there is no unusual upward revision in the prices of the petroleum products, electricity and gas tariffs are also somewhat stable, and the supply chain is intact. Credit also goes to the Pakistan Army for its contribution in checking the menace of smuggling and hoarding. This has also been acknowledged by the Prime Minister who stated that due to the crackdown, sugar prices decreased and the country was even able to export the surplus commodity. People have surely taken a sigh of relief over reduction in inflation but much more needs to be done to provide meaningful relief to the masses including reduction in electricity tariff and resolve not to allow further currency devaluation under foreign pressure.
