Inflation is expected to reduce in the emerging markets (EM) in the second half of 2021 due to stabilising commodity prices in the coming months, according to the Institute of International Finance (IIF). The IIF in its recent report titled “Are commodity prices a threat to EM inflation?” said that prices of major commodities have risen markedly as key fossil fuel benchmarks Brent crude, natural gas, and coal have jumped 40%, 17%, and 55% respectively over the last 12 months. According to the report, around one-third of Pakistan’s total import bill is due to food and energy imports. The aforementioned increase in global crude prices and the country’s heavy dependence on crude imports to meet its local demand has forced policymakers to seek alternate arrangements to buy-now-pay-later from Saudi Arabia in view to contain the current account deficit. Meanwhile, local administrative failures forced the country to import food products in the last 10 months, increasing the bill by 54% compared to the same period last year. The CPI Inflation has remained above the 10.5% mark during the last two months and is expected to remain above 11% for June bringing the overall 4QFY21 average to 11.18%. The inflation, currently testing the upper limit of the State Bank of Pakistan’s average for FY21, comes despite the government’s reluctance to pass on the higher international crude prices to the consumers fearing rebuke.