The Ministry of Finance Wednesday said that the two massive fuel price hikes witnessed in the month of August 2023 and the upward adjustment in energy tariffs would strain the inflationary pressures in the coming months.
In its Monthly Update & Outlook for August, the ministry said that the international commodity price outlook is promising and is expected to offset the negative impact of local currency depreciation in Pakistan and help lower the pressure on imported commodities’ prices.
It highlighted that the FAO Food Price Index, which tracks international prices of the most globally traded food commodities, stood at 123.9 points in July 2023, showing a decrease of 11.8 percent as compared to July 2022.
“Domestically, the high base effect would provide a little solace to inflation growth however, the two massive fuel price hikes witnessed in the month of August 2023 and upward adjustment in energy tariffs, would strain the inflationary pressures in the coming months,” the report said.
Nevertheless, the expected lagged impact of accumulated monetary tightening, fiscal consolidation efforts of the government, and better growth outlook would help ease out inflationary pressures in the later half of the current fiscal year (FY24), it added.
The report also expects imports to gradually increase in the next months. However, it said that exports are facing both global and domestic headwinds which may hinder growth in the coming months. Taking other factors into account, the current account will remain around the same level observed in July 2023.
