Inflation eases to 4.1% in December

The average pace of increase in prices of about 600 goods further slowed down to 4.1% in December, providing more room to reduce policy rate this month without risking fiscal and external sector stability. Pakistan Bureau of Statistics (PBS) reported on Wednesday that inflation measured by the Consumer Price Index (CPI) further eased to 4.1% in December compared to the same month of last year. The slow pace is in line with expectations of the federal government but is lower than the estimate of the central bank, which expected a slight increase. The central bank had projected a gradual uptick in inflation from December onwards due to the phasing out of base effect. The Ministry of Finance stated last week that inflation may remain in the range of 4-5%. The State Bank will hold the next monetary policy meeting before the end of this month for a decision on policy rate.