Inflation in Pakistan drops to 9-yr low despite govt. borrowing

Inflation in Pakistan drops to 9-yr low despite govt. borrowing Islamabad: Inflation in Pakistan had slipped to a nine-year low in April despite an expansionary fiscal policy pursued by the finance ministry.

It has underlined the need for a review of the calculation methodology that is showing a rapid slowdown in the pace of increase in prices of essential commodities, reports The Express Tribune.

According to the Pakistan Bureau of Statistics, inflation measured by the Consumer Price Index clocked in at 5.8 percent in April over a year ago. This is the lowest level since April 2004 when CPI inflation stood at 5.99 percent.

The declining rate of inflation has provided room for a reduction in interest rate in the next monetary policy.

According to sources in the State Bank of Pakistan, in the last monetary policy the policy-setting committee discussed the possibility of cutting the discount rate, but the idea was dropped for the time being and until the new government takes over.

Since May 2012, when the last government introduced some changes in the calculation methodology, the pace of increase in prices of essential commodities has been slowing down. In May last year, inflation was recorded at 12.3 percent.

Experts are calling for a review of the methodology, considering the results contrary to ground realities.

For the current year, which is going to end in June, the average inflation target has been revised downward to 9 percent from the earlier 9.5 percent.

ANI