Pakistan’s consumer price inflation rose 5.8 per cent year-on-year in January, official data showed yesterday, underscoring the central bank’s warning that price pressures could temporarily breach its target band as economic activity picks up.
The reading comes a week after the central bank held its policy rate at 10.50pc, saying inflation could exceed its 5pc to 7pc medium-term target range for a few months this year, even as growth gains momentum and imports push the trade deficit wider.
The reading from the Pakistan Bureau of Statistics compared with 5.6pc in December, when prices fell on a monthly basis due to lower perishable food costs.
On a month-on-month basis, inflation increased by 0.4pc in January. The State Bank of Pakistan said it viewed the real policy rate as sufficiently positive to stabilise inflation over the medium term, even as it flagged stronger domestic demand and external pressures as upside risks to prices.
Pakistan’s finance ministry had projected inflation would remain within a 5pc to 6pc range in January.
An International Monetary Fund staff report has cautioned against premature monetary easing under Pakistan’s $7 billion loan programme, urging policymakers to remain data-dependent to anchor inflation expectations and rebuild external buffers.
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