Finance Ministry Expects 14.5-15.5 Percent Inflation In June.

ISLAMABAD -- The ministry of finance has projected that inflation rate would further accelerate within range of 14.5 -15.5 per cent in current month (June) due to both external and internal factors.

'The government has withdrawn subsidies on fuel and energy products to control the mounting twin (budget and current account) deficit. As a result, sharp increase in prices of all oil products is witnessed. Further, the recent rise in international commodity prices especially energy and food, will also be translated into domestic prices,' the ministry of finance noted in its monthly 'Economic Update and Outlook June 2022'.

Inflation in Pakistan is driven by both external and internal factors. International commodity prices, especially oil and food prices are the main external drivers. Furthermore, domestic supply chain and market expectations also play an important role to determine inflation. Inflation has been rising since September 2021. This acceleration is expected to continue in June 2022. In this scenario, annual inflation is expected to accelerate in June and may remain within range of 14.5 -15.5 percent. It added that the government will continue to alleviate the burden of the poorest segment of the society through various programs. According to the ministry, despite achieving a real GDP growth of 5.97 percent in FY2022, the underlying macroeconomic imbalances and mounting international risks are depicting challenging outlook especially pertaining to external sector. The input situation for Kharif 2022 is satisfactory and it is expected that the agriculture sector will continue to augur well on account of continued government support. The ministry of finance has estimated current account deficit at one billion dollars in June. In June 2022, exports are generally affected by a negative seasonality, but it is expected that the downturn will be to a lesser degree compared to May 2022. Therefore, exports are expected to perform somewhat better in June 2022. On the basis of the continued declining trend in imports on account of measures taken by the government, it is expected that improvement will be observed in the trade balance in June 2022 compared to the one observed in May 2022. The remittances fell considerably in May 2022 mainly driven by its seasonal profile. This together with the deterioration of the trade balance widened the current account deficit significantly. However, in June 2022, remittances are expected to rebound. Together...