Govt Expects Inflation to Increase to 3-4% Next Month

The government expects inflation to remain between 1.5-2.0 percent in May, with a possible rise to 3.0-4.0 percent by June 2025. In its Monthly Economic Update & Outlook for May, the finance division highlighted that CPI inflation dropped to 0.3 percent YoY in April 2025, down from 0.7 percent in March and 17.3 percent in April 2024. MoM, it declined by 0.8 percent, following a 0.9 percent increase in March and a -0.4 percent decline in April 2024. The report noted that the outlook for LSM may improve gradually in coming months, with recovery expected to be gradual amid continued YoY contraction and recent MoM decline. Nonetheless, improvements in high-frequency indicators, such as rising automobile output, raw material imports, and a more accommodative monetary stance, indicates cautious optimism. Improved weather conditions and increased water availability are likely to support higher crop yields and better farming conditions contributing to overall economic growth, it added. The finance division said that exports and remittances are expected to maintain their upward trend in the coming months keeping the current account within manageable range.