The Ministry of Finance has projected a gradual decrease in inflation starting this month, citing improved supply conditions, relief from imported inflationary pressures, and the influence of a high-base effect.
According to the Monthly Economic Update and Outlook for December released on Wednesday, inflation is expected to hover between 27.5-28.5 percent in December 2023, with a further decline to 24-25 percent forecasted for January 2024.
Despite administered price increases, particularly in gas rates, the ministry expects inflation for the remaining months of FY24 to remain at a moderate level.
Stable exchange rates, controlled aggregate demand, improved supply conditions, a moderation in international commodity prices, and a favorable base effect contribute to this outlook.
The recent reduction in petrol and diesel prices is projected to offset inflationary pressures resulting from previous petrol price hikes. The decrease in fuel prices is expected to have a notable impact on reducing transportation and manufacturing expenses for the average consumer.
Efforts by sub-national governments to align public transport and freight tariffs with lower fuel costs are also anticipated to further alleviate inflationary pressures.
In the food sector, the Food and Agriculture Organisation’s price index, tracking widely traded food commodities, maintained an average of 120.4 points in November 2023.
This stability resulted from slight increases in vegetable oils, dairy products, and sugar, offset by decreases in cereals and meat prices. The index was 14.4 points (10.7pc) lower compared to the same period a year earlier.
