ISLAMABAD: The Ministry of Finance said on Wednesday that the two massive fuel price increases witnessed in August and the upward adjustment in energy tariffs would exacerbate the inflationary pressures in the coming months.
In its Monthly Update & Outlook for August, the finance ministry said that the international commodity price outlook is promising and is likely to offset the negative impact of local currency depreciation in Pakistan and assist in lowering the pressure on imported commodities’ rates.
It underlined that the FAO Food Price Index, which tracks international rates of the most globally traded food items, stood at 123.9 points in July this year, showing a drop of 11.8% as compared to July 2022.
The report said that the expected lagged impact of accumulated monetary tightening, the government’s fiscal consolidation efforts, and a better growth outlook would assist in easing out inflationary pressures in the latter half of the current financial year.
The report also expects imports to gradually increase in the coming months. However, it said that exports are facing both domestic and global headwinds, which may hinder growth in the next months.
Taking other factors into consideration, the current account will remain around the same level observed in July.
The report observed that in July, Pakistan witnessed a drop of $500 million in foreign remittances. In July 2022, it had received $2.5 billion in foreign remittances.
During the first two months of the current financial year, the country received $2 billion in foreign remittances.
During the ongoing fiscal year, the US dollar went up by Rs81.14, the report said.
Inflation in July
It said that in July 2023, inflation was recorded at 24.9 percent, while in July 2022, it was registered at 24.9%.
