Govt Expects Inflation to Decrease Slightly in December

The Finance Division expects inflation, which spiked to 29.2 percent in November, to ease out to 25.5-26.5 percent in December. In its Monthly Update & Outlook for November, the ministry highlighted that the Food and Agriculture Organization’s food price index, which tracks the most globally traded food commodities, averaged 120.6 points in October, 2023 down from 121.3 in the previous month showing a decline of 0.7 points. The October reading was the lowest since March 2021. However, it said that domestically, the high base effect would provide a little solace to inflation growth in the upcoming months. Keeping in consideration, the crop cycle of perishables, the supply pressures are expected to be relieved by end November onwards. Moreover, the reduction of fuel prices by the government would help further easing out inflationary pressures, it added. However, interestingly, the report which came out on Sunday said that it expects inflation to remain low around 26.5-27.5 percent in November 2023, a prediction that proved to be incorrect. The report further said that the inflationary pressures are receding and the outlook has improved. Inflation is expected to decline over the coming months amid receding supply constraints and modest demand. With all these positive developments, further improvement in domestic economic activities is anticipated in upcoming months, it added.