IMF Projects Average CPI Inflation at 8% in FY22

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The International Monetary Fund (IMF) has projected average Consumer Price Index (CPI) inflation at 8.7 percent in the fiscal year 2021.

IMF in its latest report ‘Second, third, fourth, and fifth reviews under the extended arrangement under the extended fund facility and request for rephasing of access’ noted that CPI is expected at an average of 8 percent in the fiscal year 2022, as continued high food prices and energy price adjustments outweigh soft international oil prices and weak domestic demand.

The report noted that core inflation remains subdued in line with tepid demand-side pressures. Wages have continued their downward trend amid spare capacity in the labor market. Inflation pressures have waned well into early 2021 amid soft domestic demand conditions, a delay of programmed energy price adjustments, and more recently by improved food supply conditions and the government’s strategic imports.


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The Pakistani authorities concurred that monetary policy should remain data-driven on a forward-looking basis to anchor inflation within the SBP’s target range of 5–7 percent over the medium term, with due consideration of public policies’ price impact and tradeoffs.

Pakistani authorities have insisted that inflation would decline to an average of 9 percent in the fiscal year 2021, helped by developments in international oil prices and soft domestic demand, but continue to face pressures from perishable food items.

“We remain vigilant to the impact that supply-side-driven inflation from some products might have in inflation expectations. Monetary policy decisions will continue to be guided by the primary goal of safeguarding price stability to ensure the program monetary targets are met and guide inflation to our medium-term objective”, the Pakistani authorities added.

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