UPDATE 1-Pakistan's annual consumer price rose 5.8% year on year in January - statistics bureau

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.

(Updates throughout with context) ISLAMABAD, Feb 2 (Reuters) -

Pakistan's consumer price inflation rose 5.8% 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%, 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 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. Pakistan's finance ministry had projected inflation would remain within a 5% to 6% range in January.

An ⁠International Monetary Fund 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.

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