Inflation

Inflation is projected to fall between 10.0 to 10.5 percent for FY2022 and 11.0 to 11.5 percent for first half of FY2023. Inflation (YoY) is expected to remain in the range of 11.5 to 12.0 percent for end-June 2022 and 8.5 to 9.0 percent for December 2022.

Executive Summary

Pakistan Institute of Development Economics (PIDE)’s inflation forecasting models predict inflation to remain between 10.0 to 10.5 percent for FY2022 and 11.0 to 11.5 percent for first half of FY2023. Compared to forecasts made by the State Bank of Pakistan (7 to 9 percent), International Monetary Fund (8.5 percent) and Asian Development Bank (7.5 percent), PIDE forecasts inflation to remain substantially higher. PIDE also expects inflation to persist in double digits till December 2022 with an upward momentum through the remaining part of FY2022 and the first half of FY2023. PIDE strongly believe that there will be a significant upward revision in the State Bank of Pakistan’s forecasts (expected range of 9.0 to 11.0 percent from previous forecast of 7.0 to 9.0 percent).

Despite being significantly higher than forecasts from other institutions, PIDE’s forecast is perfectly in line with the results of the Survey of Industry experts. More than 80 percent of the respondents expected that inflation for FY2022 will remain between 9.5 to 11.0 percent. Respondents also believe that inflation will remain in double digits for the next two fiscal years and will only be back in the single-digit in FY2024. Survey participants also expect GDP growth to remain between 4.0 to 4.7 percent for the next several years.