ISLAMABAD: Pakistan’s consumer price inflation rose 5.8 percent year-on-year in January, official data showed on Monday, underscoring the central bank’s warning that price pressures could temporarily breach its target band as economic activity picks up.
The reading comes a week after the central bank held its policy rate at 10.50 percent, saying inflation could exceed its 5 percent to 7 percent medium-term target range for a few months this year, even as growth gains momentum and imports push the trade deficit wider.
The reading from the Pakistan Bureau of Statistics compared with 5.6 percent in December, when prices fell on a monthly basis due to lower perishable food costs.
On a month-on-month basis, inflation increased by 0.4 percent in January.
The State Bank of Pakistan said it viewed the real policy rate as sufficiently positive to stabilize inflation over the medium term, even as it flagged stronger domestic demand and external pressures as upside risks to prices.
Pakistan’s finance ministry had projected inflation would remain within a 5 percent to 6 percent range in January.
An International Monetary Fund staff report has cautioned against premature monetary easing under Pakistan’s $7 billion loan program, urging policymakers to remain data-dependent to anchor inflation expectations and rebuild external buffers.
