Inflation may start rising after record lows

Depicting a cautious outlook towards growth in Large-Scale Manufacturing (LSM), the Ministry of Finance (MoF) on Thursday presented a rising trajectory for inflation during May and June. “Inflation is projected to remain between 1.5-2.0 per cent in May, with a possible rise to 3.0-4.0pc by June”, significantly higher than a record low of 0.3pc in April, the MoF said in its Monthly Economic Update and Outlook for May. It stated that the LSM activity remained sluggish so far, but its outlook may improve gradually in the coming months, with recovery expected to be gradual amid continued year-over-year (YoY) contraction and a recent month-over-month (MoM) decline. Nonetheless, improvements in high-frequency indicators — such as rising automobile output, raw material imports, and a more accommodative monetary stance — indicate cautious optimism, it said.