Annual consumer price rose 5.8% year-on-year in January, says PBS

• Reading comes week after SBP kept policy rate at 10.50%.
• Finance ministry forecasts January inflation at 5–6%.
• IMF warns against early monetary easing under loan programme.
  

The consumer price inflation rose 5.8% year-on-year in January, official data showed on Monday, underscoring the State Bank of Pakistan (SBP) 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%, saying inflation could exceed its 5% to 7% 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 (PBS) compared with 5.6% 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% in January.

The State Bank of Pakistan said it viewed the real policy rate as sufficiently positive to stabilise inflation over the medium term, even as it flagged stronger domestic demand and external pressures as upside risks to prices.

The Ministry of Finance had projected inflation would remain within a 5% to 6% range in January.

An International Monetary Fund (IMF) staff report has cautioned against premature monetary easing under Pakistan’s $7 billion loan programme, urging policymakers to remain data-dependent to anchor inflation expectations and rebuild external buffers.